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Market Integration and the Competitive Effects of Mergers

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  • Pio Baake
  • Christian Wey

Abstract

This paper examines how the deepening of market integration – a characteristic feature of the so-called globalization – affects the assessment of the competitive effects of (horizontal) mergers. We distinguish between supply-side and demand-side market integration and we argue that the latter type of market integration has been largely neglected in the literature while most of the research focused on the effects of supply-side market integration. Our main concern is that demand-side market integration may give rise to a new anticompetitive effect of mergers which is a result of firms’ incentives to price discriminate between different regions. We also relate our analysis to the proper definition of the relevant geographical market, where we criticize the SSNIP test (or, hypothetical monopolist test) which tends to define markets too narrowly from our perspective.COMMENT: Björn A. Kuchinke

Suggested Citation

  • Pio Baake & Christian Wey, 2008. "Market Integration and the Competitive Effects of Mergers," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 59(Supplemen), pages 27-52.
  • Handle: RePEc:aeq:aeqaeq:v59_y2008_is_q5_p27-52
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    More about this item

    Keywords

    Third Degree Price Discrimination; Buyer Mobility; Mergers;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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