Incentive Contracts as Merger Remedies
Gregory J. Werden
U.S. Department of Justice - Antitrust Division
Vanderbilt University - Strategy and Business Economics
Vanderbilt University - Department of Mathematics
Vanderbilt Law and Economics Research Paper No. 05-27
Contrary to the suggestion of Williamson (1968), a merger enhancing total social welfare through the creation of substantial efficiencies nevertheless may violate current antitrust law in the United States, which considers only the effects of mergers on consumers. To avoid violating antitrust laws, merging firms could contract with a third party in a manner that offsets the incentive created by a merger to raise price or restrict output.
Number of Pages in PDF File: 12
Keywords: antitrust, merger, Nash Equilibrium, merger remedy, oligopoly
Date posted: October 21, 2005
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