References (38)



*Optimal Merger Policy: Enforcement Vs. Deterrence

Lars Sørgard

Norwegian Competition Authority

The Journal of Industrial Economics, Vol. 57, Issue 3, pp. 438-456, September 2009

The purpose of this article is to investigate the optimal merger policy in the presence of deterrence as of well as of type I and type II errors. We consider the optimal number of merger investigations, both when the competition authorities commit to a particular activity level and when they do not commit. If they commit, it is shown that the low quality of final decisions may lead to the deterrence of mergers that would have been welfare improving. On the other hand, when potential mergers with the largest negative impact on welfare are deterred, we find that the merger investigations themselves might have a negative impact on welfare (enforcement effect). It is shown that the absence of commitment can lead to a less active merger policy and lower welfare than what is the case if the authority did commit to a certain level of activity. The results have important implications for how one should interpret the empirical studies of the effects of merger enforcement.

Number of Pages in PDF File: 19

Date posted: October 13, 2009  

Suggested Citation

Sørgard, Lars, *Optimal Merger Policy: Enforcement Vs. Deterrence. The Journal of Industrial Economics, Vol. 57, Issue 3, pp. 438-456, September 2009. Available at SSRN: https://ssrn.com/abstract=1486868 or http://dx.doi.org/10.1111/j.1467-6451.2009.00389.x

Contact Information

Lars Sørgard (Contact Author)
Norwegian Competition Authority ( email )
P.O. Box 439 Sentrum
NO- 5805 Bergen
HOME PAGE: http://www.kt.no/internett/index.asp?startID=& topExpand=&subExpand=&LanguageCode=9&strUrl=1003067i
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