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New Anti-Merger Theories: A Critique

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  • Edward J. Lopez

    (San Jose State University)

Abstract

The purpose of this paper is to evaluate two new anti-merger instruments, innovation markets and unilateral effects, on the basis of economic theory and evidence. I first discuss how the economics of antitrust has developed over the years, with the intention of characterizing the intellectual inheritance of 1990s’ antitrust regulators. Within this context, I then discuss each anti-merger instrument, how it has been applied in specific cases, and how it accords with underlying economic science. On the basis of these arguments, antitrust regulators should pause and reconsider the theoretical and empirical bases of applying unilateral effects and innovation markets to merger investigations.

Suggested Citation

  • Edward J. Lopez, 2005. "New Anti-Merger Theories: A Critique," Law and Economics 0512003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwple:0512003
    Note: Type of Document - pdf; pages: 20. This paper was published in Cato Journal, Winter 2001. Stable URL:
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/0512/0512003.pdf
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    References listed on IDEAS

    as
    1. Baumol, William J, 1982. "Contestable Markets: An Uprising in the Theory of Industry Structure," American Economic Review, American Economic Association, vol. 72(1), pages 1-15, March.
    2. Spence, Michael, 1983. "Contestable Markets and the Theory of Industry Structure: A Review Article," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 981-990, September.
    3. Robert D. Tollison, 1985. "Public Choice and Antitrust," Cato Journal, Cato Journal, Cato Institute, vol. 4(3), pages 905-931, Winter.
    4. Faith, Roger L & Leavens, Donald R & Tollison, Robert D, 1982. "Antitrust Pork Barrel," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 329-342, October.
    5. Fred S. McChesney, 1991. "Antitrust and Regulation: Chicago's Contradictory Views," Cato Journal, Cato Journal, Cato Institute, vol. 10(3), pages 775-798, Winter.
    6. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
    7. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-271, May.
    8. Jorde, Thomas M & Teece, David J, 1990. "Innovation and Cooperation: Implications for Competition and Antitrust," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 75-96, Summer.
    9. McChesney, Fred S. & Shughart II, William F. (ed.), 1995. "The Causes and Consequences of Antitrust," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226556352, April.
    10. Brock, William A, 1983. "Contestable Markets and the Theory of Industry Structure: A Review Article," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 1055-1066, December.
    11. Stigler, George J., 1983. "The Origin of the Sherman Act," Working Papers 27, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
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    Cited by:

    1. E. Cefis & A. Sabidussi & E.J.J Schenk, 2007. "Do mergers of potentially dominant firms foster innovation? An empirical analysis for the manufacturing sector," Working Papers 07-20, Utrecht School of Economics.

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    More about this item

    Keywords

    antitrust; mergers; innovation markets; unilateral effects;
    All these keywords.

    JEL classification:

    • K - Law and Economics

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