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Horizontal mergers, efficiency gains and remedies

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  • Emilie Dargaud

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

Abstract

The combination of structural remedies and efficiency gains in a merger may lead to pro-competitive outcomes, thus maintaining pre-merger prices. Two types of efficiencies are necessary. The first corresponds to a flatter marginal cost function, the second to a decrease in the intercept of the marginal cost curve. If these efficiency gains are not sufficient to keep the post-merger price at the pre-merger level, then divestitures by the resultant merged entity are adopted. This paper allows a comparison between two kinds of divestitures and it can be shown that, depending on the efficiency gains, divested capital distributed among the remaining competitors in the market is optimal when compared to divested capital being placed on the hands of a single competitor. Copyright Springer Science+Business Media New York 2013
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Emilie Dargaud, 2013. "Horizontal mergers, efficiency gains and remedies," Post-Print halshs-00799512, HAL.
  • Handle: RePEc:hal:journl:halshs-00799512
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00799512
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    References listed on IDEAS

    as
    1. Amir, Rabah & Diamantoudi, Effrosyni & Xue, Licun, 2009. "Merger performance under uncertain efficiency gains," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 264-273, March.
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    5. repec:pri:cepsud:140weinberg is not listed on IDEAS
    6. Joseph Farrell and Carl Shapiro., 2000. "Scale Economies and Synergies in Horizontal Merger Analysis," Economics Working Papers E00-291, University of California at Berkeley.
    7. Cabral, Luis M. B., 2003. "Horizontal mergers with free-entry: why cost efficiencies may be a weak defense and asset sales a poor remedy," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 607-623, May.
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    More about this item

    Keywords

    Horizontal mergers; efficiency gains; remedies;

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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