Merger policy with merger choice

Nocke, Volker ; Whinston, Michael D.

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Document Type: Article
Year of publication: 2013
The title of a journal, publication series: American Economic Review : AER
Volume: 103
Issue number: 2
Page range: 1006-1033
Place of publication: Nashville, Tenn.
Publishing house: American Economic Assoc.
ISSN: 0002-8282 , 1944-7981
Publication language: English
Institution: School of Law and Economics > VWL, Mikroökonomik (Nocke 2009-)
Subject: 330 Economics
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.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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