Assessment of Post-merger Coordinated Effects: Characterization by Simulations

Marc Ivaldi and Vicente Lagos

No 11218, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper aims at evaluating the coordinated effects of horizontal mergers by simulating their impact on firms’ critical discount factors. We consider a random coefficient model on the demand side and heterogeneous price-setting firms on the supply side. Results suggest that mergers strengthen the incentives to collude among merging parties, but weaken the incentives of non-merging parties, with the former effect being stronger. To assess the magnitudes of these effects, we introduce the concepts of Asymmetry in Payoffs and Change in Payoffs effects, which allow us to identify appropriate screening tools according to the relative pre-merger payoffs of merging parties.

Keywords: Collusion; Coordinated effects; Critical discount factor; Merger simulation (search for similar items in EconPapers)
JEL-codes: L41 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-cmp, nep-com and nep-ind
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Citations: View citations in EconPapers (1)

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Working Paper: Assessment of Post-merger Coordinated Effects: Characterization by Simulations (2016)
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