Socially Beneficial Mergers: A New Class of Concentration Indices
AbstractThe prominent Herfindahl-Hirschman index (HHI), yields a higher concentration level in response to any merger between firms, implying that any merger will decrease the social welfare. Although HHI is used by the Anti-trust Division of the U.S. Department of Justice (AD-DoJ), its merger implications are not fully embraced by the anti-trust authorities. We propose a class of concentration indices that is in line with the spirit of the AD-DoJ’s merger policies and consider different theoretical models which indicate that the AD-DoJ is justified in allowing mergers especially among smaller firms, as they counter the market power of dominant firms.
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Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 0504.
Length: 25 pages
Date of creation: Mar 2005
Date of revision:
Horizontal Mergers; Industry Concentration; the Anti-Trust Division; Hirfindahl-Hirschman Index (HHI); Dominant Firm(s);
Find related papers by JEL classification:
- L0 - Industrial Organization - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-COM-2005-08-13 (Industrial Competition)
- NEP-MIC-2005-08-13 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ugur Akgün, 2004. "Mergers With Supply Functions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 535-546, December.
- Blackorby, Charles & Donaldson, David & Weymark, John A., 1982.
"A normative approach to industrial-performance evaluation and concentration indices,"
European Economic Review,
Elsevier, vol. 19(1), pages 89-121.
- BLACKORBY, Charles & DONALDSON, David & WEYMARK, John A., . "A normative approach to industrial-performance evaluation and concentration indices," CORE Discussion Papers RP -483, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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