Economics at the FTC: Spatial Demand, Veterinary Hospital Mergers, Rulemaking, and Noncompete Agreements

The U.S. Federal Trade Commission enforces federal competition and consumer protection laws that prevent anticompetitive, deceptive, and unfair business practices, and works to advance government policies that protect consumers and promote competition. The FTC’s Bureau of Economics performs economic analysis to support both the enforcement and policy activities of the Commission. This article discusses several examples of these activities. We first discuss some work our economists have done on spatial considerations in demand estimation, and then present an analytical approach that has been developed to assess consumer choice between service providers with the use of data on geographic variation in the location of the customers of two merging service providers. We apply this technique in the context of the analysis of the competitive effects of a merger of veterinary hospitals. Next, we discuss an important tool in the FTC’s arsenal: rulemaking. We describe the benefits and costs of rulemaking, the rulemaking process, and the role of economic analysis in that process, and then highlight recent FTC rulemaking activities and the economic analysis of a proposed rulemaking that would ban employers from imposing non-compete clauses in employment contracts.