DP4175 Efficiency Gains and Myopic Antitrust Authority in a Dynamic Merger Game
|Author(s):||Massimo Motta, Helder Vasconcelos|
|Publication Date:||January 2004|
|Keyword(s):||efficiency offence, endogenous mergers, foresight|
|JEL(s):||D43, L13, L41|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=4175|
This Paper models a sequential merger formation game with endogenous efficiency gains in which every merger has to be submitted for approval to the Antitrust Authority (AA). Two different types of AA are studied: first, a myopic AA, which judges a given merger without considering that subsequent mergers may occur; and, second, a forward-looking AA, which anticipates the ultimate market structure a given merger will lead to. By contrasting the decisions of these two types of AA, merger policy implications can be drawn. In particular, the efficiency offence argument does not find any justification under a forward-looking AA.