Working Paper: CEPR ID: DP7077
Authors: Volker Nocke; Michael Whinston
Abstract: We analyze the optimal dynamic policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and occur over time. Approving a currently proposed merger will affect the profitability and welfare effects of potential future mergers, the characteristics of which may not yet be known to the antitrust authority. We show that, in many cases, this apparently difficult problem has a simple resolution: an antitrust authority can maximize discounted consumer surplus by using a completely myopic merger review policy that approves a merger today if and only if it does not lower consumer surplus given the current market structure.
Keywords: Efficiency Gain; Horizontal Merger; Market Power; Merger Policy; Oligopoly
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 |
|---|---|
| merger approval (G34) | consumer surplus (D46) |
| disjoint mergers (G34) | approval of merger maximizes consumer surplus (L21) |
| merger approval (G34) | future merger proposals influence (G34) |
| approval of one merger (G34) | positive spillover effects on others (D62) |