Asymmetric Collusion and Merger Policy

Mattias Ganslandt (), Lars Persson and Helder Vasconcelos

No 719, Working Paper Series from Research Institute of Industrial Economics

Abstract: In their merger control, EU and the US have considered symmetric size distribution (cost structure) of firms to be a factor potentially leading to collusion. We show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with higher risk of collusion, when firms face indivisible costs of collusion. In particular, we show that if the rule determining the collusive outcome has the property that the large (efficient) firm benefits sufficiently more from collusion when industry asymmetries increase, collusion can become more likely when firms are moderately asymmetric.

Keywords: Collusion; Cost Asymmetries; Merger Policy (search for similar items in EconPapers)
JEL-codes: D43 L41 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007-09-27
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Related works:
Working Paper: Asymmetric Collusion and Merger Policy (2007)
Working Paper: Asymmetric Collusion and Merger Policy (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0719

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