New Test Predicts Higher Prices After Mergers, Impacting Consumer Wallets
The article introduces a new test to determine if a merger between rival companies will reduce competition and raise prices. Instead of defining the market, the test focuses on pricing pressure after the merger. By looking at the profit margins and product substitution between the merging firms, the test can predict if the merger will harm competition. This approach is based on economics, practical, and more effective for mergers involving different products.