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Dynamic Merger Review

53 Pages Posted: 17 Feb 2009  

Volker Nocke

University of Mannheim

Michael D. Whinston

Sloan School of Management and Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 2008

Abstract

We analyze the optimal dynamic policy of an antitrust authority towards horizontal mergers when merger proposals are endogenous and occur over time. Approving a currently proposed merger will affect the profitability and welfare effects of potential future mergers, the characteristics of which may not yet be known to the antitrust authority. We show that, in many cases, this apparently difficult problem has a simple resolution: an antitrust authority can maximize discounted consumer surplus by using a completely myopic merger review policy that approves a merger today if and only if it does not lower consumer surplus given the current market structure.

Keywords: efficiency gain, horizontal merger, market power, merger policy, oligopoly

JEL Classification: D43, L13, L41

Suggested Citation

Nocke, Volker and Whinston, Michael D., Dynamic Merger Review (December 2008). CEPR Discussion Paper No. DP7077. Available at SSRN: https://ssrn.com/abstract=1344636

Volker Nocke

University of Mannheim ( email )

Michael D. Whinston (Contact Author)

Sloan School of Management and Department of Economics ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

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