We analyze the optimal policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and firms choose which of several mutually exclusive mergers to propose. In our model, the optimal policy of an antitrust authority that seeks
to maximize expected consumer surplus imposes a tougher standard on "larger" mergers, i.e., those involving firms with a larger pre-merger market share, or equivalently, leading to a larger naively-computed post-merger Herfindahl index. The optimal policy
is a response to a bias in firms' proposal incentives: firms always propose a larger merger when it is better for consumers than a smaller one, but sometimes will propose the larger one even when it is worse for consumers.
Dieser Eintrag ist Teil der Universitätsbibliographie.
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