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A Distance-based Algorithm for Defining Antitrust Markets

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Abstract

We propose a simple algorithm for defining merger-specific geographic antitrust markets based on merging firm proximity. Applying it to over a thousand hypothetical bank mergers, we compare concentration measures in our markets to those defined by the Federal Reserve, which are not merger-specific, finding broad agreement but also offering potential improvements upon current definitions.

Suggested Citation

  • Charles Taragin & Marco Taylhardat, 2025. "A Distance-based Algorithm for Defining Antitrust Markets," Finance and Economics Discussion Series 2025-051, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2025-51
    DOI: 10.17016/FEDS.2025.051
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    File URL: https://www.federalreserve.gov/econres/feds/files/2025051pap.pdf
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    Keywords

    Market definition; Bank mergers; Computational methods;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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