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Optimal Merger Remedies

Author

Listed:
  • Nocke, Volker
  • Rhodes, Andrew

Abstract

We develop a framework to study horizontal mergers when the parties can propose remedies to an antitrust authority. Remedies are modeled as asset divestitures, which make the firm receiving the assets more efficient at the expense of the merged firm. We consider both the case where the merger affects a single market and where it affects multiple markets. Solving for the merging firms' optimal proposal, we investigate when it involves remedies---and if so, which assets should be divested, and to whom, and how this depends on market characteristics such as the level of competitiveness.

Suggested Citation

  • Nocke, Volker & Rhodes, Andrew, 2025. "Optimal Merger Remedies," CEPR Discussion Papers 20573, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20573
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    File URL: https://cepr.org/publications/DP20573
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    Keywords

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    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

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