Economics at the FTC: Quantitative Analyses of Two Chemical Manufacturing Mergers

Abstract

Economists at the Federal Trade Commission support the agency’s competition and consumer protection missions in numerous ways. In this article, we discuss the economic analyses that were conducted in connection with two Commission antitrust investigations: The first involved a merger of manufacturers of titanium dioxide, which is an intermediate good used in the manufacture of paints, plastics, and other final goods. This article highlights the analysis that the FTC economists performed relating to techniques used to define the relevant product market as well as to analyze the impact of the merger with a Cournot model. The second investigation also involved a merger of manufacturers of an intermediate product—polyethylene terephthalate resin—which is a plastic that is used to manufacture bottles and food packaging. We highlight here the consideration that FTC economists gave to an argument that one of the manufacturers was a failing firm—which, if true, may imply that the merger would not reduce competition relative to the counterfactual in which one firm would exit the market.