Demand-Side Efficiencies in Merger Control
David S. Evans
University of Chicago Law School; University College London; Global Economics Group
March 25, 2003
Firms may be able to create new and improved products as a result of merging. These "demand-side efficiencies" should be considered by competition authorities in considering whether to allow a merger. Unlike reductions in costs that merged firms may not pass on to consumers, new and better products necessarily make consumers better off. Moreover, the value of demand-side efficiencies can be quite large, as recent studies of improved products ranging from toilet paper to minivans has demonstrated. Of course, competition authorities should seek evidence that mergers will facilitate new and improved products and weigh these benefits against increased prices and other costs the merger may create. A review of European Union merger cases shows that the Commission needs to consider demand-side efficiencies, and provides further caution against making efficiencies an "offence" rather than a "defence."
Number of Pages in PDF File: 42
Keywords: demand-side efficiencies, mergers and acquisitions, welfare, competition, antitrust, network effects, European Union, European Commission, Microsoft
JEL Classification: D61, K2, L4, L5working papers series
Date posted: June 2, 2003
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.297 seconds