Bargaining Failures and Merger Policy

Ramon Caminal and Roberto Burguet

No 633, Working Papers from Barcelona School of Economics

Abstract: We study approval rules in a model where horizontal merger proposals arise endogenously as the outcome of negotiations among the firms in the industry. We make two main points. First, relatively ine¢ cient merger proposals succeed with positive probability. That is, the negotiation process may result in a particular merger agreement despite the existence of an alternative one that would generate higher profits and higher consumer surplus. Second, the antitrust authority should optimally commit to an approval rule that is more stringent for all mergers than the optimal ex-post rule.

Keywords: endogenous mergers; merger policy; inefficient bargaining; synergies; antitrust; flexible protocol (search for similar items in EconPapers)
JEL-codes: L13 L41 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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Related works:
Journal Article: BARGAINING FAILURES AND MERGER POLICY (2015)
Working Paper: Bargaining failures and merger policy (2012)
Working Paper: Bargaining failures and merger policy (2012)
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