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A Note on Upward Pricing Pressure:The possibility of false positives

Lars Mathiesen (), Øivind Nilsen () and Lars Sørgard ()
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Lars Mathiesen: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

No 11/2012, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Farrell and Shapiro proposed a simple test of the possible upward pricing pressure (UPP) following a merger. They showed that the test may give false negatives, that is, indicate that a merger may not give an UPP, while a more comprehensive test would indicate the opposite. We show that their test applied to a case with asymmetric firms may give false positives.

Keywords: Unilateral merger effects; post-merger price effects. (search for similar items in EconPapers)
JEL-codes: K21 L41 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2012-05-08
New Economics Papers: this item is included in nep-com and nep-law
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Journal Article: A NOTE ON UPWARD PRICING PRESSURE: THE POSSIBILITY OF FALSE POSITIVES (2012) Downloads
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