Microeconomics › Section K · Monopoly and antitrust policy › Topic K.1

Corporate mergers and market concentration

When two firms become one, the arithmetic of the market changes: costs may fall through scale, but rivals are one fewer and coordination gets easier. Deciding which effect wins - and when a government should say no - is the antitrust problem, and it begins with measuring concentration.

In this topic

  • Why firms merge
  • The regulator's dilemma
  • Where the law came from
  • Merger review in practice
  • Measuring concentration: the four-firm ratio and its blind spot
  • The HHI sees the giant
  • Worked example: a merger's arithmetic
  • Market definition: the decisive question
  • Worked example: reviewing two mergers
  • Common mistakes to avoid
  • Key takeaways

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