Merger Policy with Alternative Mergers and Efficiency Gains

Carlos Razo ()
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Carlos Razo: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden, http://www.ne.su.se

No 2004:9, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: This paper models the behaviour of a Competition Authority (CA) that takes into consideration alternative future mergers when deciding whether to approve a current merger notification. The result is a more stringent CA that demands higher merger-efficiencies than the ones needed to restore pre-merger welfare, opening the possibility of challenging a merger that reduces prices. However, in the absence of entry and exit, a merger policy that considers alternative mergers is never consumer welfare decreasing. Additionally, CA’s merger-efficiencies expectations play an important role in the stance the CA adopts (tougher or laxer). Lastly, the paper suggests that even when alternative mergers could have positive effects on consumer welfare, CAs should exercise caution in adopting such merger policy given the significant side-effects.

Keywords: competition policy; mergers; efficiency gains (search for similar items in EconPapers)
JEL-codes: K21 L40 L41 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2004-08-20
New Economics Papers: this item is included in nep-com, nep-ind and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2004_0009

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