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Sequential Mergers and Antitrust Authority’s Decisions in Stackelberg Markets

Author

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  • Mariana Cunha

    (Universidade Católica Portuguesa)

  • Hélder Vasconcelos

    (Universidade do Porto)

Abstract

This paper analyses a sequential merger formation game in a setting where: (i) firms compete à la Stackelberg; (ii) mergers may give rise to endogenous efficiency gains; and (iii) every merger has to be submitted for approval to the Antitrust Authority (AA). Two different types of AA are studied: first, we assume a myopic AA, which accepts or rejects a given merger without considering that this merger may be followed by other mergers; and, second, a forward looking AA, which anticipates the final industry structure a merger will give rise to, if approved. We conclude that these two types of AA adopt similar decisions whenever a merger would not trigger the exit of outsider firms. Their decisions are, however, shown to be very different when evaluating exit-inducing merger proposals.

Suggested Citation

  • Mariana Cunha & Hélder Vasconcelos, 2018. "Sequential Mergers and Antitrust Authority’s Decisions in Stackelberg Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(3), pages 373-394, September.
  • Handle: RePEc:kap:jincot:v:18:y:2018:i:3:d:10.1007_s10842-017-0268-x
    DOI: 10.1007/s10842-017-0268-x
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    Cited by:

    1. Eileen Fumagalli & Tore Nilssen, 2019. "Sweetening the Pill: a Theory of Waiting to Merge," Journal of Industry, Competition and Trade, Springer, vol. 19(3), pages 351-388, September.

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    More about this item

    Keywords

    Mergers; Myopic versus forward-looking merger control; Stackelberg;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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