Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition

Joseph Farrell () and Carl Shapiro

The B.E. Journal of Theoretical Economics, 2010, vol. 10, issue 1, 41

Abstract: We describe a simple initial indicator of whether a proposed merger between rivals in a differentiated product industry is likely to raise prices through unilateral effects. Our diagnostic calibrates upward pricing pressure (UPP) resulting from the merger, based on the price/cost margins of the merging firms' products and the extent of direct substitution between them. As a screen for likely unilateral effects, this approach is practical, more transparent, and better grounded in economics than are concentration-based methods.

Keywords: mergers; antitrust; oligopoly; unilateral effects (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (205)

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Working Paper: Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition (2008)
Working Paper: Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition (2008)
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DOI: 10.2202/1935-1704.1563

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