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Asymmetric Collusion and Merger Policy

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Author Info
Mattias Ganslandt (Research Institute of Industrial Economics (IFN))
Lars Persson () (Research Institute of Industrial Economics (IFN) and CEPR)
Helder Vasconcelos (Universidade Católica Portuguesa and CEPR)

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Abstract

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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File URL: http://www.concorrencia.pt/download/WP28_mglphv-Asymmetric_Collusion.pdf
File Format: application/pdf
File Function: First version, 2007
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Publisher Info
Paper provided by Portuguese Competition Authority in its series Working Papers with number 28.

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Length: 31 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:pca:wpaper:28

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Related research
Keywords: Collusion Cost Asymmetries Merger Policy

Other versions of this item:

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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    Other versions:
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  6. Horn, Henrik & Persson, Lars, 2001. "The equilibrium ownership of an international oligopoly," Journal of International Economics, Elsevier, vol. 53(2), pages 307-333, April. [Downloadable!] (restricted)
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    Other versions:
  8. Helder Vasconcelos, 2005. "Tacit Collusion, Cost Asymmetries, and Mergers," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 39-62, Spring.
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