Merger Policy with Merger Choice

Volker Nocke and Michael Whinston

American Economic Review, 2013, vol. 103, issue 2, 1006-33

Abstract: We analyze the optimal policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and firms choose among alternative mergers. In our model, the optimal policy of an antitrust authority that seeks to maximize expected consumer surplus imposes a tougher standard on "larger" mergers, i.e., those involving firms with a larger pre-merger market share. The optimal policy is a response to a bias in firms' proposal incentives: firms always propose a larger merger when it is better for consumers than a smaller one, but sometimes will propose the larger one even when it is worse for consumers.

JEL-codes: D43 G34 G38 K21 L13 L41 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.2.1006
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Citations: View citations in EconPapers (50)

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