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Do remedies affect the efficiency defense? An optimal merger-control analysis

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  • Cosnita-Langlais, Andreea
  • Tropeano, Jean-Philippe

Abstract

This paper examines the optimal use of remedies and the efficiency defense for merger control. We develop a framework in which merger efficiency gains are endogenously determined and are not observed by the Competition Authority. The possibility of an efficiency defense can push firms to design the merger better, leading to greater efficiency gains. Firms can also submit remedies to the Competition Authority: they interact with the efficiency defense, by reducing the firm's incentive to enhance efficiency. At the same time remedies improve the assessment of the merger, in particular by signaling the true level of efficiency gains. We ask to what extent it may be optimal to make use of both instruments simultaneously, and thus discuss the possibility that the Competition Agency refrain from using one of the instruments to try to improve overall merger-control performance.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 30 (2012)
Issue (Month): 1 ()
Pages: 58-66

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Handle: RePEc:eee:indorg:v:30:y:2012:i:1:p:58-66

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Merger control; Efficiency defense; Merger remedies;

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Cited by:
  1. Andreea Cosnita-Langlais & Lars Sørgard, 2014. "Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?," EconomiX Working Papers 2014-29, University of Paris West - Nanterre la Défense, EconomiX.

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