Merger Control in a Changing World

Volker Nocke, Martin Peitz and Nicolas Schutz

No 21598, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: How should merger control account for future changes in market conditions? We study horizontal merger policy in the presence of industry-wide cost or demand shocks, using both a homogeneous-goods Cournot model and a multiproduct-firm model of price competition with constant elasticity of substitution (CES) or multinomial logit (MNL) demand. We derive two main sets of results. First, regarding deterministic shocks: under both Cournot competition with incomplete pass-through and multiproduct-firm price competition, an adverse shock increases industry concentration but calls for softer merger control. Second, regarding cost or demand uncertainty: under a cautious maxmin approach, aggregate cost uncertainty calls for softer merger control under the same assumptions. By contrast, under a risk-neutral expected-consumer-surplus standard, greater cost uncertainty demands tougher merger control in the Cournot model with log-concave demand, and in the multiproduct-firm price competition model when the outside option is sufficiently attractive.

JEL-codes: D43 K21 L13 L40 L41 (search for similar items in EconPapers)
Date: 2026-06
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