Working Paper: CEPR ID: DP2190
Authors: Ramon Fauloller; Luis C. Corchn
Abstract: In this paper we analyze the implementation of socially optimal mergers when the regulator is not informed about the parameters that determine social and private gains from potential mergers. We find that most of the standard tools in dominant strategy implementation, like the revelation principle or the Vickrey-Clarke-Groves mechanism can not be applied in our framework. We show that implementation in dominant strategies of the optimal merger policy without budget balance is possible under an additional assumption. The same assumption makes possible the implementation in Nash equilibrium of the optimal merger policy with budget balance.
Keywords: mergers; welfare
JEL Codes: L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mergers (G34) | reduction in competition (L49) |
| reduction in competition (L49) | negative impact on social welfare (D69) |
| mergers (G34) | cost reductions (D61) |
| cost reductions (D61) | enhancement of social welfare (D60) |
| optimal merger policy (L21) | socially optimal merger outcomes (L21) |
| Nash equilibrium (C72) | implementation of optimal merger policy (L21) |
| truthful revelation of private information (D82) | socially optimal merger outcomes (L21) |