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Assessment of Post-merger Coordinated Effects: Characterization by Simulations

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  • Ivaldi, Marc
  • Lagos, Vicente

Abstract

This paper aims at evaluating the coordinated effects of horizontal mergers by simulating their impact on firms’ critical discount factors. We consider a random coefficient model on the demand side and heterogeneous price-setting firms on the supply side. Results suggest that mergers strengthen the incentives to collude among merging parties, but weaken the incentives of non-merging parties, with the former effect being stronger. To assess the magnitudes of these effects, we introduce the concepts of Asymmetry in Payoffs and Change in Payoffs effects, which allow us to identify appropriate screening tools according to the relative pre-merger payoffs of merging parties.

Suggested Citation

  • Ivaldi, Marc & Lagos, Vicente, 2016. "Assessment of Post-merger Coordinated Effects: Characterization by Simulations," CEPR Discussion Papers 11218, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11218
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    1. Oliver Budzinski & Gisela Aigner & Arndt Christiansen, 2006. "The Analysis of Coordinated Effects in EU Merger Control: Where do we stand after Sony/BMG and Impala?," Marburg Working Papers on Economics 200614, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2018. "Quantifying the coordinated effects of partial horizontal acquisitions," European Economic Review, Elsevier, vol. 110(C), pages 108-149.
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    Cited by:

    1. Luke Garrod & Matthew Olczak, 2017. "Collusion Under Imperfect Monitoring with Asymmetric Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 654-682, September.

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    More about this item

    Keywords

    Collusion; Coordinated effects; Critical discount factor; Merger simulation;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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