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Dynamic Merger Review

Volker Nocke () and Michael Whinston

No 7077, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze the optimal dynamic policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and occur over time. Approving a currently proposed merger will affect the profitability and welfare effects of potential future mergers, the characteristics of which may not yet be known to the antitrust authority. We show that, in many cases, this apparently difficult problem has a simple resolution: an antitrust authority can maximize discounted consumer surplus by using a completely myopic merger review policy that approves a merger today if and only if it does not lower consumer surplus given the current market structure.

Keywords: efficiency gain; horizontal merger; market power; merger policy; oligopoly (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 (search for similar items in EconPapers)
Date: 2008-12
New Economics Papers: this item is included in nep-com and nep-ind
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Journal Article: Dynamic Merger Review (2010) Downloads
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