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Optimal Merger Remedies

Author

Listed:
  • Nocke, Volker
  • Rhodes, Andrew

Abstract

We develop a framework to study horizontal mergers when the parties can propose remedies to an antitrust authority. Remedies are modeled as asset divestitures, which make the firm receiving the assets more efficient at the expense of the merged firm. We consider both the case where the merger affects a single market and where it affects multiple markets. Solving for the merging firms’ optimal proposal, we investigate when it involves remedies—and if so, which assets should be divested, and to whom, and how this depends on market characteristics such as the level of competitiveness.

Suggested Citation

  • Nocke, Volker & Rhodes, Andrew, 2025. "Optimal Merger Remedies," TSE Working Papers 25-1660, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:130888
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    References listed on IDEAS

    as
    1. Markus Dertwinkel-Kalt & Christian Wey, 2016. "Merger Remedies in Oligopoly under a Consumer Welfare Standard," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 32(1), pages 150-179.
    2. Justin P. Johnson & Andrew Rhodes, 2021. "Multiproduct mergers and quality competition," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 633-661, September.
    3. 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, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    4. repec:hal:pseose:hal-00643695 is not listed on IDEAS
    5. Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2012. "Do remedies affect the efficiency defense? An optimal merger-control analysis," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 58-66.
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    Citations

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    Cited by:

    1. Takeshi Fukasawa & Hiroshi Ohashi, 2025. "Investment Dynamics and Merger Policy: Long-run Effects of Horizontal Merger in Oligopolistic Market," CIRJE F-Series CIRJE-F-1264, CIRJE, Faculty of Economics, University of Tokyo.
    2. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2025. "Revisiting Behavioral Merger Remedies in Turbulent Markets: A Framework for Dynamic Competition," Working Papers halshs-05087373, HAL.
    3. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2025. "Revisiting Behavioral Merger Remedies in Dynamic Markets," GREDEG Working Papers 2025-22, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France, revised Jan 2026.

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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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