Socially Beneficial Mergers: A New Class of Concentration Indices
The prominent Herfindahl-Hirschman index (HHI), yields a higher concentration level in response to any merger between firms, implying that any merger will decrease the social welfare. Although HHI is used by the Anti-trust Division of the U.S. Department of Justice (AD-DoJ), its merger implications are not fully embraced by the anti-trust authorities. We propose a class of concentration indices that is in line with the spirit of the AD-DoJ’s merger policies and consider different theoretical models which indicate that the AD-DoJ is justified in allowing mergers especially among smaller firms, as they counter the market power of dominant firms.
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- Ugur Akgün, 2004. "Mergers With Supply Functions," Journal of Industrial Economics, Wiley Blackwell, vol. 52(4), pages 535-546, December.
- BLACKORBY, Charles & DONALDSON, David & WEYMARK, John A., .
"A normative approach to industrial-performance evaluation and concentration indices,"
CORE Discussion Papers RP
-483, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Blackorby, Charles & Donaldson, David & Weymark, John A., 1982. "A normative approach to industrial-performance evaluation and concentration indices," European Economic Review, Elsevier, vol. 19(1), pages 89-121.
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