Sequential Mergers and Antitrust Authority’s Decisions in Stackelberg Markets
Mariana Cunha () and
Helder Vasconcelos ()
Journal of Industry, Competition and Trade, 2018, vol. 18, issue 3, No 6, 373-394
Abstract This paper analyses a sequential merger formation game in a setting where: (i) firms compete à la Stackelberg; (ii) mergers may give rise to endogenous efficiency gains; and (iii) every merger has to be submitted for approval to the Antitrust Authority (AA). Two different types of AA are studied: first, we assume a myopic AA, which accepts or rejects a given merger without considering that this merger may be followed by other mergers; and, second, a forward looking AA, which anticipates the final industry structure a merger will give rise to, if approved. We conclude that these two types of AA adopt similar decisions whenever a merger would not trigger the exit of outsider firms. Their decisions are, however, shown to be very different when evaluating exit-inducing merger proposals.
Keywords: Mergers; Myopic versus forward-looking merger control; Stackelberg (search for similar items in EconPapers)
JEL-codes: L13 D43 L40 L41 (search for similar items in EconPapers)
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