Choosing Among Tools for Assessing Unilateral Merger Effects
Gregory J. Werden
U.S. Department of Justice - Antitrust Division
Vanderbilt University - Strategy and Business Economics
March 1, 2011
Vanderbilt Law and Economics Research Paper No. 11-19
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
Date posted: April 6, 2011 ; Last revised: November 20, 2012
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