Razo, Carlos () (Dept. of Economics, Stockholm University)
Abstract
This 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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Publisher Info
Paper 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: Handle: RePEc:hhs:sunrpe:2004_0009
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 Email: Web page: http://www.ne.su.se/ More information through EDIRC
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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
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