Quantifying the effects from horizontal mergers in European competition policy
AbstractThis paper starts from a recent case to study how merger analysis in Europe may potentially be improved through simulation analysis. Starting from the product and geographic market definition in the Merger Decision, we formulate and estimate an oligopoly model with differentiated products. The model is simulated to account for the changed multiproduct ownership structure after the merger. We show how our first two tests, a potential and an actual market power test, produce useful information, complementary to the traditional dominance principle adopted in the European Union. A drastic revision of current merger principles is thus not required. We also show how simulation analysis can provide useful additional information that goes beyond the traditional dominance principle. This is illustrated through two examples. First, we analyze the effects of efficiencies through cost savings. Second, we compare alternative merger scenarios.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 23 (2005)
Issue (Month): 9-10 (December)
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Web page: http://www.elsevier.com/locate/inca/505551
Other versions of this item:
- Ivaldi, M & Verboven, Frank, 2001. "Quantifying the effects from horizontal mergers in European competition policy," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/118587, Katholieke Universiteit Leuven.
- Ivaldi, Marc & Verboven, Frank, 2001. "Quantifying the Effects from Horizontal Mergers in European Competition Policy," CEPR Discussion Papers 2697, C.E.P.R. Discussion Papers.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
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