Asymmetric Collusion and Merger Policy
AbstractIn their merger control, EU and the US have considered symmetric size distribution (cost structure) of firms to be a factor potentially leading to collusion. We show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with higher risk of collusion, when firms face indivisible costs of collusion. In particular, we show that if the rule determining the collusive outcome has the property that the large (efficient) firm benefits sufficiently more from collusion when industry asymmetries increase, collusion can become more likely when firms are moderately asymmetric.
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Bibliographic InfoPaper provided by Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto) in its series Working Papers de Economia (Economics Working Papers) with number 15.
Length: 31 pages
Date of creation: Aug 2007
Date of revision:
Collusion; Cost Asymmetries; Merger Policy;
Other versions of this item:
- Ganslandt, Mattias & Persson, Lars & Vasconcelos, Helder, 2007. "Asymmetric Collusion and Merger Policy," Working Paper Series 719, Research Institute of Industrial Economics.
- Mattias Ganslandt & Lars Persson & Helder Vasconcelos, 2007. "Asymmetric Collusion and Merger Policy," Working Papers 28, Portuguese Competition Authority.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-06 (All new papers)
- NEP-BEC-2007-10-06 (Business Economics)
- NEP-COM-2007-10-06 (Industrial Competition)
- NEP-IND-2007-10-06 (Industrial Organization)
- NEP-MIC-2007-10-06 (Microeconomics)
- NEP-REG-2007-10-06 (Regulation)
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