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Acquisitions to Enter New Markets

Carl Shapiro

Journal of Economic Perspectives2025https://doi.org/10.1257/jep.20241414article
AJG 4ABDC A*
Weight
0.48

Abstract

How should antitrust enforcers treat acquisitions by successful firms to enter new markets? Should a major pharmaceutical company with an extensive sales and distribution network be permitted to acquire a popular drug that does not compete against any of the drugs it already owns? Throughout American economic history, expansion by successful firms into new markets has played a vital role in promoting competition and spurring economic growth. However, acquisitions to enter new markets also can harm competition by enabling monopolists to enlarge their empires. The 2023 Merger Guidelines break new ground by announcing that the US antitrust agencies will challenge mergers and acquisitions that “could enable the merged firm to extend a dominant position from one market into a related market,” but they say very little about how such acquisitions will be evaluated. This article explains how antitrust enforcers can use economic evidence and theory to distinguish between acquisitions to enter new markets that are harmful and those that are beneficial.

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https://doi.org/https://doi.org/10.1257/jep.20241414

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@article{carl2025,
  title        = {{Acquisitions to Enter New Markets}},
  author       = {Carl Shapiro},
  journal      = {Journal of Economic Perspectives},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1257/jep.20241414},
}

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Acquisitions to Enter New Markets

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Evidence weight

0.48

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.41 × 0.4 = 0.16
M · momentum0.63 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.