Choosing Among Tools for Assessing Unilateral Merger Effects

Abstract:     
A raft of articles offered contrasting views on analytic tools for assessing unilateral effects from differentiated products mergers. We revisit this debate to clarify the issues and place them in context. We consider the choice among analytic tools at three stages of a merger assessment - initial screening, ultimate decision, and courtroom presentation. In doing so, we explain how the proper analytic tool for a particular merger depends on the competitive process in which the merging firms are engaged and how the merger is apt to affect it. We also explain how the proper analytical tool for a particular merger depends on the information currently available. We address the Upward Pricing Pressure Index (UPPI), finding merit in the idea of a simple screen for differentiated products mergers, and suggesting a slightly simpler calculation. We conclude that either as a screen or as part of a full assessment of a merger, other tools are preferable to the UPPI.

Number of Pages in PDF File: 28

Keywords: unilateral effects, mergers, UPP, merger simulation

JEL Classification: L11, L41, K21

working papers series