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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.

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  • 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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    3. Adams, Robert M. & Brevoort, Kenneth P. & Driscoll, John C., 2023. "Is lending distance really changing? Distance dynamics and loan composition in small business lending," Journal of Banking & Finance, Elsevier, vol. 156(C).
    4. David Benson & Samuel Blattner & Serafin Grundl & You Suk Kim & Ken Onishi, 2024. "Concentration and Geographic Proximity in Antitrust Policy: Evidence from Bank Mergers," American Economic Journal: Microeconomics, American Economic Association, vol. 16(3), pages 107-133, August.
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    Keywords

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    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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