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A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?

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Author Info
Oliver Budzinski () (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)

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Abstract

Advanced economic instruments like simulation models are enjoying an increased popularity in practical antitrust. There is hope that they – being quantitative predictive economic evidence – can substitute for qualitative structural analysis and lead to unambiguous results. This paper demonstrates that it can be theoretically impossible to identify the most appropriate simulation model for any given merger proposal. Due to the inevitable necessity to reduce real-world complexity and multi-parameter character of merger cases, the comparative fit of proposed merger simulation models with mutually incompatible predictions can be the same. This is valid even if an ideal antitrust procedure is assumed. This insight is important regarding two aspects. First, the scope for partisan economic evidence cannot be completely eroded in merger control. Second, simulation cannot eliminate or substitute for qualitative reasoning and economically informed common sense.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/03-2008_Budzinski.pdf
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Publisher Info
Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200803.

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Length: 13 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:mar:magkse:200803

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Related research
Keywords: merger simulation; merger control; antitrust; economic evidence;

Other versions of this item:

Find related papers by JEL classification:
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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    Other versions:
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    Other versions:
  6. Oliver Budzinski & Arndt Christiansen, 2007. "The Oracle/PeopleSoft Case: Unilateral Effects, Simulation Models and Econometrics in Contemporary Merger Control," Marburg Working Papers on Economics 200702, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
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  10. Damien J. Neven, 2006. "Competition economics and antitrust in Europe," Economic Policy, CEPR, CES, MSH, vol. 21(48), pages 741-791, October. [Downloadable!] (restricted)
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