Merger Policy with Alternative Mergers and Efficiency Gains
AbstractThis paper models the behaviour of a Competition Authority (CA) that takes into consideration alternative future mergers when deciding whether to approve a current merger notification. The result is a more stringent CA that demands higher merger-efficiencies than the ones needed to restore pre-merger welfare, opening the possibility of challenging a merger that reduces prices. However, in the absence of entry and exit, a merger policy that considers alternative mergers is never consumer welfare decreasing. Additionally, CA’s merger-efficiencies expectations play an important role in the stance the CA adopts (tougher or laxer). Lastly, the paper suggests that even when alternative mergers could have positive effects on consumer welfare, CAs should exercise caution in adopting such merger policy given the significant side-effects.
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Bibliographic InfoPaper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2004:9.
Length: 24 pages
Date of creation: 20 Aug 2004
Date of revision:
Contact details of provider:
Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
Web page: http://www.ne.su.se/
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competition policy; mergers; efficiency gains;
Find related papers by JEL classification:
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-23 (All new papers)
- NEP-COM-2004-08-23 (Industrial Competition)
- NEP-IND-2004-08-31 (Industrial Organization)
- NEP-LAW-2004-08-23 (Law & Economics)
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