Assessing horizontal mergers under uncertain efficiency gains

Philippe Choné and Laurent Linnemer

International Journal of Industrial Organization, 2008, vol. 26, issue 4, 913-929

Abstract: The analysis of horizontal mergers hinges on a tradeoff between unilateral effects and efficiency gains. We examine the role of uncertainty in this tradeoff. In theory, the attitude towards uncertainty depends on the curvature of the social objective function. On the one hand, adjustment effects, both on the consumers' and firms' sides, tend to make consumers' surplus and firms' profits convex. On the other hand, pass-through effects may act in the opposite direction. We show that convexity prevails in a number of situations, including the most general linear demand model. Implications for empirical merger analysis are exposed.

Date: 2008
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Citations: View citations in EconPapers (23)

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Related works:
Working Paper: Assessing horizontal mergers under uncertain efficiency gains (2008)
Working Paper: Assessing Horizontal Mergers under Uncertain Efficiency Gains (2006)
Working Paper: Assessing Horizontal Mergers under Uncertain Efficiency Gains (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:26:y:2008:i:4:p:913-929

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