Supranational Agency: A Solution for Conflict in International Mergers?
National Institute of Industrial Engineering (NITIE)
January 2, 2008
Conflict between national antitrust or competition laws is likely to increase with the increase in global integration. In this paper we develop a two-country, three-firm model to analyze the possibilities of conflict between national antitrust authorities, using the welfare criteria. We show that if countries maximize their national welfare there is a likelihood of conflict resulting at times in obstruction of welfare-enhancing mergers. We show that shifting to either a global welfare or consumer surplus standard can resolve conflicts but may not always lead to an efficient outcome. To achieve efficiency, transfer payments are required. We argue that there is a scope for institutions like WTO to assume the role of supranational authority in cross border merger cases.
Number of Pages in PDF File: 33
Keywords: Conflict, Cross border merger, Efficiency, Welfare, Standardization
JEL Classification: D74, F51, L4
Date posted: February 19, 2008