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A NOTE ON UPWARD PRICING PRESSURE: THE POSSIBILITY OF FALSE POSITIVES

Lars Mathiesen, Øivind Nilsen () and Lars Sørgard ()

Journal of Competition Law and Economics, 2012, vol. 8, issue 4, 881-887

Abstract: Joseph Farrell and Carl Shapiro proposed a simple test of the possible upward pricing pressure (UPP) following a merger. They showed that the test may give false negatives—that is, indicate that a merger may not give an UPP, while a more comprehensive test would indicate the opposite. We show that their test applied to a case with asymmetric firms may give false positives.

JEL-codes: K21 L41 (search for similar items in EconPapers)
Date: 2012
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