Economics at your fingertips  

Antitrust versus industrial policies, entry and welfare

Guy Meunier, Jean-Pierre Ponssard and Francisco Ruiz-Aliseda

No 2015-01, Working Papers from Alimentation et Sciences Sociales

Abstract: In industries with large sunk costs, the investment strategy of firms depends on the regulatory context. We consider ex-ante industrial policies in which the sunk cost may be either taxed or subsidized, and antitrust policies which could either be pro-competitive (leading to divestiture in case of high ex-post profitability) or lenient (allowing mergers in case of low ex-post profitability). Through a simple entry game we completely characterize the impact of these policies and examine their associated dynamic trade-offs between the timing of the investment, the ex-post benefits for the consumers, and the possible duplication of fixed costs. We find that merger policies are dominated by ex-ante industrial policies, whereas the latter are dominated by divestiture policies only under very special circumstances.

Keywords: entry; industry dynamic; antitrust policy; divestiture (search for similar items in EconPapers)
JEL-codes: L1 L4 L5 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-03
New Economics Papers: this item is included in nep-com, nep-cta and nep-ind
References: View references in EconPapers View complete reference list from CitEc

Downloads: (external link) ... ard_Ruiz-Aliseda.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found ( [302 Found]--> [301 Moved Permanently]--> [301 Moved Permanently]-->

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from Alimentation et Sciences Sociales Contact information at EDIRC.
Bibliographic data for series maintained by Repec ALISS ( this e-mail address is bad, please contact ).

Page updated 2024-06-07
Handle: RePEc:ali:wpaper:2015-01