Measuring market power in antitrust: a new hybrid approach

This paper proposes a new hybrid approach for measuring market power in antitrust using a mixture of market share calculation, price comparison, and mark-up assessment. The proposed approach is termed 'hybrid' because it combines elements from structural and non-structural approaches. These elements are directly observable and measurable, making our proposed approach more practical and realistic for the antitrust analysis requirements. Through an empirical study involving the use of real industrial data, we show that our hybrid approach provides a more reliable estimation of market power in comparison with existing methods. Also, we empirically prove that classical approaches are myopic regarding the pricing behaviour of firms with market power. This drawback may increase the type I error in the assessment of market power and lead to the over-enforcement of competition law.