Mergers and collusion with asymmetric capacities
When it examines the risk of coordinated effects, an antitrust authority will usually compare the situation where the merger is accepted with an attendant risk of collusion with the benchmark case in which competition is present ex-post. The main objective of this paper is to show that the antitrust authority must take into account the possibility for firms to collude if a merger is rejected. In fact, firms can have incitations to make collusion ex-post (after a rejection of a merger) whereas they would not make collusion ex-ante. All the papers on mergers and collusion tend to look at a minimal discount factor threshold for collusion to be sustained. This article does not only suggest necessary and sufficient conditions for collusion to be enforced but it also analyses the choice which firms have as to whether to collude. We consider an industry with cost-asymmetric firms and we study the analysis of collusion under leniency programmes.
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| Length: | |
| Date of creation: | Mar 2007 |
| Date of revision: | |
| Publication status: | Published in Working paper du GATE 2007-08. 2007 |
| Handle: | RePEc:hal:journl:halshs-00142435 |
| Note: | View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00142435 |
| Contact details of provider: | Web page: https://hal.archives-ouvertes.fr/
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References listed on IDEAS
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- 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, Oxford University Press, vol. 98(2), pages 185-199.
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