Merger Remedies in Oligopoly under a Consumer Welfare Standard

36 Pages Posted: 11 Oct 2013 Last revised: 15 Apr 2015

Markus Dertwinkel-Kalt

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Christian Wey

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE)

Date Written: April 2015

Abstract

We analyze the welfare effects of structural remedies on merger activity in a Cournot oligopoly when the antitrust agency applies a consumer surplus standard. We derive conditions such that otherwise price-increasing mergers become externality free by the use of remedial divestitures. In this case, the consumer surplus standard ensures that mergers are only implemented if they raise social welfare. If the merging parties can extract the entire surplus from the asset sale, then the socially optimal buyer will be selected under a consumer standard.

Keywords: Remedies, Divestiture, Merger Control, Oligopoly, Synergies

JEL Classification: L13, L41, K21

Suggested Citation

Dertwinkel-Kalt, Markus and Wey, Christian, Merger Remedies in Oligopoly under a Consumer Welfare Standard (April 2015). Available at SSRN: https://ssrn.com/abstract=2338407 or http://dx.doi.org/10.2139/ssrn.2338407

Markus Dertwinkel-Kalt (Contact Author)

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Christian Wey

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany
+49-211-81-15009 (Phone)
+49-211-81-15499 (Fax)

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