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Dynamic Merger Review

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  • Whinston, Michael D.
  • Nocke, Volker

Abstract

We analyze the optimal dynamic policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and occur over time. Approving a currently proposed merger will affect the profitability and welfare effects of potential future mergers, the characteristics of which may not yet be known to the antitrust authority. We show that, in many cases, this apparently difficult problem has a simple resolution: an antitrust authority can maximize discounted consumer surplus by using a completely myopic merger review policy that approves a merger today if and only if it does not lower consumer surplus given the current market structure.

Suggested Citation

  • Whinston, Michael D. & Nocke, Volker, 2008. "Dynamic Merger Review," CEPR Discussion Papers 7077, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7077
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    References listed on IDEAS

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    More about this item

    Keywords

    Efficiency gain; Horizontal merger; market power; Merger policy; Oligopoly;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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