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Merger remedies in frontier-based regulation

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  • Bogetoft, Peter
  • Kališ, Richard

Abstract

This paper contributes to the literature on mergers and frontier-based regulation. Revenue cap schemes based on frontier benchmarking can provide strong incentives for cost reduction, especially when there is a large number of low-cost peers available. Mergers can also lead to cost savings through knowledge sharing and economies of scale and scope. However, mergers may reduce the number of peers, thereby diminishing the competitive pressure generated by the benchmarking model. Therefore, regulators must balance the cost savings from mergers against the potential reduction in competitive pressure from a smaller peer group.

Suggested Citation

  • Bogetoft, Peter & Kališ, Richard, 2026. "Merger remedies in frontier-based regulation," European Journal of Operational Research, Elsevier, vol. 332(3), pages 1016-1031.
    • Handle: RePEc:eee:ejores:v:332:y:2026:i:3:p:1016-1031
    DOI: 10.1016/j.ejor.2026.02.027
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    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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