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An empirical analysis of Mexican merger policy

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  • Avalos, Marcos
  • De Hoyos, Rafael E.

Abstract

A newly created dataset including 239 decisions made by the Mexican Federal Competition Commission on horizontal mergers between 1997 and 2001 is used to estimate the different factors affecting the Commission's resolution. The paper approximates the decision making process using two different discrete choice models. The results indicate that, contrary to the Commission's objective, the presence of efficiency gains increases the probability of a case being issued. The findings also show that factors different from the ones explicitly mentioned by the Commission have a significant effect on the Commission's final decision. In particular, the presence of a foreign company among the would-be merger firms significantly increases the likelihood of observing an allowed merger.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4527.

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Date of creation: 01 Feb 2008
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Handle: RePEc:wbk:wbrwps:4527

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Keywords: Microfinance; Economic Theory&Research; Labor Policies; Bankruptcy and Resolution of Financial Distress; Corporate Law;

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  1. Coate, Malcolm B & Higgins, Richard S & McChesney, Fred S, 1990. "Bureaucracy and Politics in FTC Merger Challenges," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 463-82, October.
  2. Farrell, Joseph & Shapiro, Carl, 1988. "Horizontal Mergers: An Equilibrium Analysis," Department of Economics, Working Paper Series qt0tp305nx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
  4. Bergman, Mats A. & Jakobsson, Maria & Razo, Carlos, 2005. "An econometric analysis of the European Commission's merger decisions," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 717-737, December.
  5. White, Lawrence J, 1987. "Antitrust and Merger Policy: A Review and Critique," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 13-22, Fall.
  6. Malcolm B. Coate & Andrew N. Kleit, 2004. "Art of the Deal: The Merger Settlement Process at the Federal Trade Commission," Southern Economic Journal, Southern Economic Association, vol. 70(4), pages 977-997, April.
  7. Mikhail S. Kouliavtsev, 2005. "Some Empirical Evidence on the Effectiveness of Antimerger Relief in the United States," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 370-384, April.
  8. Coate, Malcolm B & McChesney, Fred S, 1992. "Empirical Evidence on FTC Enforcement of the Merger Guidelines," Economic Inquiry, Western Economic Association International, vol. 30(2), pages 277-93, April.
  9. Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000. "Efficiency Gains from Mergers," Working Paper Series 543, Research Institute of Industrial Economics.
  10. Posner, Richard A, 1970. "A Statistical Study of Antitrust Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 365-419, October.
  11. Davies, Stephen W & Driffield, Nigel L & Clarke, Roger, 1999. "Monopoly in the UK: What Determines Whether the MMC Finds against the Investigated Firms?," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 263-83, September.
  12. Khemani, R S & Shapiro, Daniel M, 1993. "An Empirical Analysis of Canadian Merger Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 161-77, June.
  13. Fisher, Franklin M, 1987. "Horizontal Mergers: Triage and Treatment," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 23-40, Fall.
  14. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
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Cited by:
  1. Richard J. Grimbeek & Sunel Grimbeek & Steven F. Koch, 2011. "The Consistency of Merger Decisions in a Developing Country: The South African Competition Commission," Working Papers 201117, University of Pretoria, Department of Economics.
  2. Robert Breunig & Flavio M. Menezes, 2008. "An Empirical Investigation of the Mergers Decision Process in Australia," Discussion Papers Series 382, School of Economics, University of Queensland, Australia.
  3. Qing Yang & Michael Pickford, 2014. "The Merger Clearance Decision Process in New Zealand: Application of a New Two-Stage Probit Model," Review of Industrial Organization, Springer, vol. 44(3), pages 299-325, May.

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