This paper contributes to the economic analysis of merger control by taking into account the efficiency gains for the design of structural merger remedies when the competition authorities do not observe the magnitude of efficiency gains. We show that whenever divestitures are necessary, the Competition Authority will need to extract from the merging partners their private information on the merger’s efficiency gains. For this we propose a revelation mechanism combining divestitures with two additional tools, the regulation of the divestitures sale price and a merger fee. We show that an optimal combination of both instruments is effective: the most efficient merged firms are claimed to pay a merger fee while the less efficient divest asets at an upwards distorted sale price.
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Paper provided by Grenoble Applied Economics Laboratory (GAEL) in its series Working Papers with number
200803.
Find related papers by JEL classification: L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
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