To prevent possible abuse of market power in the future an antitrust agency can force merging firms to divest some of their assets. The divested assets can be sold via auction either to existing competitors or to a new entrant. Divesture of assets extends the range of parameters when a merger satisfies a consumer surplus standard and should be approved. If the agency takes a more active stance toward the selection of a purchase of the assets, then it could lead to a favorable outcome for consumers and merging firms.
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Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number
wp229.
Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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