Merger policy with merger choice

DOI:	https://doi.org/10.1257/aer.103.2.1006
URL:	https://www.aeaweb.org/articles?id=10.1257/aer.103...
Weitere URL:	http://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.103...
Dokumenttyp:	Zeitschriftenartikel
Erscheinungsjahr:	2013
Titel einer Zeitschrift oder einer Reihe:	American Economic Review : AER
Band/Volume:	103
Heft/Issue:	2
Seitenbereich:	1006-1033
Ort der Veröffentlichung:	Nashville, Tenn.
Verlag:	American Economic Assoc.
ISSN:	0002-8282 , 1944-7981
Sprache der Veröffentlichung:	Englisch
Einrichtung:	Fakultät für Rechtswissenschaft und Volkswirtschaftslehre > VWL, Mikroökonomik (Nocke 2009-)
Fachgebiet:	330 Wirtschaft
Abstract:	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.