Merger Remedies in Oligopoly under a Consumer Welfare Standard
Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)
University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE)
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.
Number of Pages in PDF File: 36
Keywords: Remedies, Divestiture, Merger Control, Oligopoly, Synergies
JEL Classification: L13, L41, K21
Date posted: October 11, 2013 ; Last revised: April 15, 2015