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Horizontal Mergers, Structural Remedies, And Consumer Welfare In A Cournot Oligopoly With Assets

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  • THIBAUD VERGÉ

Abstract

Competition authorities sometimes require that firms divest some of their assets to rivalsin order to allow a merger to take place. This paper extends the results of Farrell andShapiro [1990a] and shows that, in the absence of technological synergies, a merger ishighly unlikely to benefit consumers, even if it is subjected to appropriate structuralremedies. For instance, a merger may ultimately lead to a lower price only if at leasttwo different firms acquire the divested assets, and if the merging parties had relativelyimportant pre-merger market shares.
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  • Thibaud Vergé, 2010. "Horizontal Mergers, Structural Remedies, And Consumer Welfare In A Cournot Oligopoly With Assets," Journal of Industrial Economics, Wiley Blackwell, vol. 58(4), pages 723-741, December.
  • Handle: RePEc:bla:jindec:v:58:y:2010:i:4:p:723-741
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    Cited by:

    1. Dertwinkel-Kalt, Markus & Wey, Christian, 2016. "Structural remedies as a signaling device," Information Economics and Policy, Elsevier, vol. 35(C), pages 1-6.
    2. van Koten, Silvester & Ortmann, Andreas, 2013. "Structural versus behavioral remedies in the deregulation of electricity markets: An experimental investigation motivated by policy concerns," European Economic Review, Elsevier, vol. 64(C), pages 256-265.
    3. Xavier Boutin, 2015. "Mergers and the Dynamics of Innovation," Working Papers ECARES ECARES 2015-15, ULB -- Universite Libre de Bruxelles.
    4. Markus Dertwinkel-Kalt & Christian Wey, 2016. "Merger Remedies in Oligopoly under a Consumer Welfare Standard," Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(1), pages 150-179.
    5. Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2012. "Do remedies affect the efficiency defense? An optimal merger-control analysis," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 58-66.
    6. Emilie Dargaud, 2013. "Horizontal mergers, efficiency gains and remedies," European Journal of Law and Economics, Springer, vol. 36(2), pages 349-372, October.
    7. Dertwinkel-Kalt, Markus & Wey, Christian, 2014. "Remedies vs. Extreme Options in Merger Control," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100397, Verein für Socialpolitik / German Economic Association.
    8. Federico, Giulio & López, Ángel L., 2013. "Optimal asset divestments with homogeneous products," International Journal of Industrial Organization, Elsevier, vol. 31(1), pages 12-25.
    9. Dertwinkel-Kalt, Markus & Wey, Christian, 2012. "The effects of remedies on merger activity in oligopoly," DICE Discussion Papers 81, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    10. Dertwinkel-Kalt, Markus & Wey, Christian, 2016. "Evidence production in merger control: The role of remedies," DICE Discussion Papers 217, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

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