The Federal Trade Commission's recent public policy emphasis has been on antitrust action to break up firms in certain industries. The basis for such action is often the market structure-profitability paradigm. The authors review the framework and empirical results of studies based on the paradigm, identify and demonstrate shortcomings of research in this area, propose and test a more appealing model, and conclude that the FTC cannot properly rely on findings produced by this research stream for the direction of public policy efforts.
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