Negotiating remedies : revealing the merger efficiency gains
AbstractThis paper aims to contribute to the normative economic analysis of mergers by taking into account the possible efficiency gains for the design of structural merger remedies. We show that a larger asset transfer should be requested from a less efficient merged firm than from a more efficient one, which comforts the proportionality principle advocated by competition policy practitioners. However, since cost savings are private information of merging firms, the Competition Authority will require them to reveal their efficiency gains, so as to tailor the optimal remedy. We propose a revelation mechanism combining the use of divestitures with the regulation of asset sale prices. We discuss the opportunity of such an instrument, and argue that in practice Competition Authorities might be entiled to infer a lot from the sale price of divestitures.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number v05047.
Length: 28 pages
Date of creation: Jun 2005
Date of revision: Apr 2006
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Merger control; structural merger remedies; asymmetric information.;
Other versions of this item:
- Cosnita, Andreea & Tropeano, Jean-Philippe, 2009. "Negotiating remedies: Revealing the merger efficiency gains," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 188-196, March.
- Cosnita, A. & Tropeano, J.P., 2008. "Negotiating remedies : revealing the merger efficiency gains," Working Papers 200803, Grenoble Applied Economics Laboratory (GAEL).
- Andreea Cosnita & Jean-Philippe Tropeano, 2005. "Negotiating remedies : revealing the merger efficiency gains," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00194906, HAL.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-03 (All new papers)
- NEP-COM-2005-07-03 (Industrial Competition)
- NEP-IND-2005-07-03 (Industrial Organization)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/3597, Universidad Carlos III de Madrid.
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