Working Paper: CEPR ID: DP4175
Authors: Massimo Motta; Helder Vasconcelos
Abstract: 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.
Keywords: Efficiency Offense; Endogenous Mergers; Foresight
JEL Codes: D43; L13; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Myopic AA (C20) | Inefficiencies (D61) |
| Forward-looking AA (G17) | Improved Market Outcomes (D49) |