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Remedies vs. Extreme Options in Merger Control

Markus Dertwinkel-Kalt () and Christian Wey

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: We investigate how remedies in merger control affect information acquisition by an antitrust agency. We identify conditions under which an ''extreme options'' regime which does not allow for remedies improves information acquisition by the agency which increases consumer surplus. The legislator (''principal'') and the agency share the same objective function with the only exception that the latter must bear information costs. When remedies are not feasible, then the agency's incentive to acquire information is relatively large as a false decision tends to have large adverse effects. When remedies are feasible, the intermediate option does not involve such risks, so that incentives to acquire information decreases. However, our results depend crucially on the institutional environment. In the case of an adversial system, information acquisition incentives are not per se lower if remedies are feasible.

JEL-codes: K21 L13 L40 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-ind and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100397

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