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Dynamic Merger ReviewVolker NockeDepartment of Economics, University of Mannheim Michael D. WhinstonNorthwestern University - Department of Economics; National Bureau of Economic Research (NBER) December 2008 CEPR Discussion Paper No. DP7077 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.
Number of Pages in PDF File: 53 Keywords: efficiency gain, horizontal merger, market power, merger policy, oligopoly JEL Classification: D43, L13, L41 working papers seriesDate posted: February 17, 2009Suggested CitationContact Information
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