Quantifying the Scope for Efficiency Defense in Merger Control: The Werden-Froeb-Index

31 Pages Posted: 2 Jan 2009

See all articles by Marie Goppelsroeder

Marie Goppelsroeder

University of Amsterdam

Maarten Pieter Schinkel

University of Amsterdam - Department of Economics; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Jan Tuinstra

University of Amsterdam - Department of Quantitative Economics (KE); Tinbergen Institute

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Abstract

This paper introduces the Werden-Froeb Index (WFI) to assist in evaluating merger-specific efficiencies in horizontal mergers. The index measures the weighted average reduction in marginal costs required to restore pre-merger equilibrium prices and quantities after the (full or partial) merger is consummated. The WFI is well defined, objective and robust, and it has relatively low information requirements. We propose to use the index as a natural complement to concentration measures such as the Hirschmann-Herfindahl Index in the assessment of horizontal mergers.

Suggested Citation

Goppelsroeder, Marie and Schinkel, Maarten Pieter and Tuinstra, Jan, Quantifying the Scope for Efficiency Defense in Merger Control: The Werden-Froeb-Index. The Journal of Industrial Economics, Vol. 56, Issue 4, pp. 778-808, December 2008. Available at SSRN: https://ssrn.com/abstract=1319574 or http://dx.doi.org/10.1111/j.1467-6451.2008.00360.x

Marie Goppelsroeder (Contact Author)

University of Amsterdam ( email )

Department of Economics (ACLE)
Roetersstraat 11
Amsterdaam, 1018WB
Netherlands
+31-20-525-5052 (Phone)
+31-20-525-5318 (Fax)

Maarten Pieter Schinkel

University of Amsterdam - Department of Economics ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31 20 525 7132 (Phone)
+31 20 525 5318 (Fax)

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Jan Tuinstra

University of Amsterdam - Department of Quantitative Economics (KE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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