Entry and Merger Policy

Jaunaux, Laure, Lefouili, Yassine and Sand-Zantman, Wilfried (2017) Entry and Merger Policy. Economics Letters, 161. pp. 124-129.

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Official URL: http://tse-fr.eu/pub/32104

Abstract

This note examines the optimal merger policy when competition authorities take into account the e¤ects of their policy on firms'entry decisions. We consider a model featuring ex ante uncertainty about profits and consumer surplus, and derive a simple rule governing the optimal policy in that context. More specifically, we show that the ratio between the loss in ex post consumer surplus and the gain in an entrant's profit induced by an ex post anticompetitive merger is a sufficient statistic to determine when competition authorities should be more lenient. Our findings imply in particular that competition authorities may find it optimal to commit to being more lenient towards successful, rather than unsuccessful, entrants.

Item Type: Article
Language: English
Date: December 2017
Refereed: Yes
Uncontrolled Keywords: Merger Policy, Entry, Uncertainty
JEL codes: K21 - Antitrust Law
L13 - Oligopoly and Other Imperfect Markets
L40 - General
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 13 Apr 2018 09:04
Last Modified: 24 Jan 2019 00:16
OAI ID: oai:tse-fr.eu:32104
URI: http://publications.ut-capitole.fr/id/eprint/25708

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