Negotiating remedies: Revealing the merger efficiency gains
AbstractThis paper contributes to the economic analysis of merger control by taking into account the efficiency gains for the design of structural merger remedies when the competition authorities do not observe the magnitude of efficiency gains. We show that whenever divestitures are necessary, the Competition Authority will need to extract from the merging partners their private information on the merger's efficiency gains. For this we propose a revelation mechanism combining divestitures with two additional tools, the regulation of the divestitures sale price and a merger fee. We show that an optimal combination of both instruments is effective: the most efficient merged firms are to pay a merger fee while the less efficient divest assets at an upwards distorted sale price.
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Bibliographic InfoArticle provided by Elsevier in its journal International Journal of Industrial Organization.
Volume (Year): 27 (2009)
Issue (Month): 2 (March)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551
Merger control Structural merger remedies Asymmetric information;
Other versions of this item:
- Cosnita, A. & Tropeano, J.P., 2008. "Negotiating remedies : revealing the merger efficiency gains," Working Papers 200803, Grenoble Applied Economics Laboratory (GAEL).
- Andrea Cosnita & Jean-Philippe Tropeano, 2005. "Negotiating remedies : revealing the merger efficiency gains," Cahiers de la Maison des Sciences Economiques v05047, Université Panthéon-Sorbonne (Paris 1), revised Apr 2006.
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
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