IDEAS home Printed from https://ideas.repec.org/p/bon/boncrc/crctr224_2025_680.html

Optimal Merger Remedies

Author

Listed:
  • Volker Nocke

  • Andrew Rhodes

Abstract

This paper studies optimal merger remedies when an antitrust authority has a consumer surplus standard. Remedies are modeled as asset divestitures which make the firm receiving the assets more efficient, at the expense of the merged firm. If a merger affects only a single market, asset divestitures on their own are not sufficient for the merger to be implemented--synergies are also required. As the market becomes less competitive, it is less likely that any merger is implemented; conditional on implementing one, it is more likely that divestitures are used to create a new competitor. If instead a merger affects several different markets, and the authority cares about consumer surplus aggregated over all markets, then it is optimal to divest as many assets as feasible in some markets and no assets in all remaining markets. The optimal merger proposal is more likely to entail divestitures in more competitive markets.

Suggested Citation

  • Volker Nocke & Andrew Rhodes, 2025. "Optimal Merger Remedies," CRC TR 224 Discussion Paper Series crctr224_2025_680, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_680
    as

    Download full text from publisher

    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp680
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markus Dertwinkel-Kalt & Christian Wey, 2016. "Merger Remedies in Oligopoly under a Consumer Welfare Standard," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(1), pages 150-179.
    2. Justin P. Johnson & Andrew Rhodes, 2021. "Multiproduct mergers and quality competition," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 633-661, September.
    3. repec:hal:pseose:hal-00643695 is not listed on IDEAS
    4. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2025. "Revisiting Behavioral Merger Remedies in Turbulent Markets: A Framework for Dynamic Competition," Working Papers halshs-05087373, HAL.
    2. Takeshi Fukasawa & Hiroshi Ohashi, 2025. "Investment Dynamics and Merger Policy: Long-run Effects of Horizontal Merger in Oligopolistic Market," CIRJE F-Series CIRJE-F-1264, CIRJE, Faculty of Economics, University of Tokyo.
    3. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2025. "Revisiting Behavioral Merger Remedies in Dynamic Markets," GREDEG Working Papers 2025-22, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Jan 2026.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shekhar, Shiva & Wey, Christian, 2017. "Uncertain merger synergies, passive partial ownership, and merger control," DICE Discussion Papers 260, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Cosnita-Langlais Andreea & Sørgard Lars, 2018. "Enforcement and Deterrence in Merger Control: The Case of Merger Remedies," Review of Law & Economics, De Gruyter, vol. 14(3), pages 1-22, November.
    3. Jackie M.L. Chan & Michael Irlacher & Michael Koch, 2022. "Multiproduct Mergers and the Product Mix in Domestic and Foreign Markets," Economics working papers 2022-03, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Onur A. Koska, 2019. "A consumer-surplus standard in foreign acquisitions, foreign direct investment, and welfare," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(1), pages 149-179, February.
    5. Justin P. Johnson & Andrew Rhodes, 2021. "Multiproduct mergers and quality competition," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 633-661, September.
    6. Cabolis, C. & Manasakis, C. & Moreno, Diego & Petrakis, Emmanuel, 2016. "R&D investments fostering horizontal mergers," UC3M Working papers. Economics 23280, Universidad Carlos III de Madrid. Departamento de Economía.
    7. José Luis Moraga‐González & Evgenia Motchenkova & Saish Nevrekar, 2022. "Mergers and innovation portfolios," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 641-677, December.
    8. Markus Dertwinkel-Kalt & Christian Wey, 2021. "Evidence Production in Merger Control: The Role of Remedies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(1), pages 1-12, August.
    9. Stefania Borla, "undated". "Profitability of Horizontal Mergers with Price Interdependencies," Discussion Papers 04/13, Department of Economics, University of York.
    10. Jovanovic, Dragan & Wey, Christian, 2012. "An equilibrium analysis of efficiency gains from mergers," DICE Discussion Papers 64, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    11. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    12. Fang Fang & Baojun Jiang & Jiong Sun, 2023. "Partial vertical ownership in the presence of downstream competition," Production and Operations Management, Production and Operations Management Society, vol. 32(6), pages 1692-1704, June.
    13. Duarte Brito & Daniel Magueta, 2014. "Horizontal Mergers, Entry and International Trade," Review of International Economics, Wiley Blackwell, vol. 22(5), pages 923-943, November.
    14. Marc Escrihuela-Villar & Ramon Faulí-Oller, 2008. "Mergers in asymmetric Stackelberg markets," Spanish Economic Review, Springer;Spanish Economic Association, vol. 10(4), pages 279-288, December.
    15. Aiyuan Tao & X. Henry Wang, 2024. "On comparing the profitability of horizontal mergers under Cournot and Bertrand competitions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2059-2065, June.
    16. Gérard Gaudet & Rams Kanouni, 2004. "Trade Liberalization and the Profitability of Domestic Mergers," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 353-358, August.
    17. Derui Wang & Xiaole Wu & Christopher S. Tang & Yue Dai, 2025. "Endogenous Merger Decisions Among Competitors: Impact of Limited Capacity and Loyal Segments," Management Science, INFORMS, vol. 71(6), pages 4777-4794, June.
    18. Zemsky, Peter & Adner, Ron, 2003. "Disruptive Technologies and the Emergence of Competition," CEPR Discussion Papers 3994, Centre for Economic Policy Research.
    19. Maarten Janssen & Vladimir Karamychev, 2013. "Mergers in Bidding Markets," Tinbergen Institute Discussion Papers 13-012/VII, Tinbergen Institute.
    20. Tomohiro ARA & Arghya GHOSH & Hodaka MORITA & Hiroshi MUKUNOKI, 2025. "Cross-border Partial Equity Ownership," Discussion papers 25026, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bon:boncrc:crctr224_2025_680. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CRC Office (email available below). General contact details of provider: https://www.crctr224.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.