Abstract

In merger analysis antitrust authorities normally use a market-share-based approach, in which the delineation of relevant markets has a predominant role: market definition generally determines the result of the case. The concept of relevant market suffers from great theoretical limitations, especially in the analysis of unilateral effects of mergers when firms offer differentiated products. In addition, the use of this particular tool presents several technical problems. For these reasons, some authors have recently proposed a new approach, based on simulations, to evaluate mergers. The simulation approach does not entail the definition of the relevant market, and it focuses on the price effect of the proposed merger. This can be done using high-frequency data in estimating demand systems, and assuming a Bertrand competition among firms.