Efficiency Gains and Structural Remedies in Merger Control

Helder Vasconcelos

No 6093, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies the role of structural remedies in merger control in a Cournot setting where (endogenous) mergers are motivated by prospective efficiency gains and must be submitted to an Antitrust Authority (AA) which might require partial divestiture for approval. Both positive and negative effects of merger remedies are identified. First, structural remedies create new merger opportunities to firms. Second, when divestitures are required, the AA over-fixes, i.e., goes beyond the recreation of the level of competition that existed prior to the transaction. Finally, by insisting in over-fixing, the AA may discourage firms to look for more efficient mergers, inducing a final outcome where consumers' surplus is lower than if divestitures couldn't be required. Overall, however, structural remedies are shown to be good: consumers' surplus ex-ante is higher with than without remedies.

Keywords: Efficiency gains; Endogenous mergers; Failing firm defence.; Merger remedies (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 L51 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-com, nep-ind and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: EFFICIENCY GAINS AND STRUCTURAL REMEDIES IN MERGER CONTROL (2010)
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