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A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?

Author

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  • Oliver Budzinski

    () (Philipps-University Marburg)

Abstract

Advanced economic instruments like simulation models are enjoying an increased popularity in practical antitrust. There is hope that they – being quantitative predictive economic evidence – can substitute for qualitative structural analysis and lead to unambiguous results. This paper demonstrates that it can be theoretically impossible to identify the most appropriate simulation model for any given merger proposal. Due to the inevitable necessity to reduce real-world complexity and multi-parameter character of merger cases, the comparative fit of proposed merger simulation models with mutually incompatible predictions can be the same. This is valid even if an ideal antitrust procedure is assumed. This insight is important regarding two aspects. First, the scope for partisan economic evidence cannot be completely eroded in merger control. Second, simulation cannot eliminate or substitute for qualitative reasoning and economically informed common sense.

Suggested Citation

  • Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:200803
    as

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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/03-2008_budzinski.pdf
    File Function: First version, 2008
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    2. Harbord, David & Hoernig, Steffen, 2010. "Welfare Analysis of Regulating Mobile Termination Rates in the UK (with an Application to the Orange/T-Mobile Merger)," MPRA Paper 21515, University Library of Munich, Germany.

    More about this item

    Keywords

    merger simulation; merger control; antitrust; economic evidence;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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