Ganslandt, Mattias () (Research Institute of Industrial Economics (IFN)) Persson, Lars () (Research Institute of Industrial Economics (IFN)) Vasconcelos, Helder (IGIER, Università Bocconi)
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In 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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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number
719.
Length: 31 pages Date of creation: 27 Sep 2007 Date of revision: Handle: RePEc:hhs:iuiwop:0719
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Find related papers by JEL classification: D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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