Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?

31 Pages Posted: 7 May 2014

See all articles by Andreea Cosnita

Andreea Cosnita

Université Paris I Panthéon-Sorbonne - Maison des Sciences Economiques

Lars Sorgard

Norwegian School of Economics and Business Administration (NHH); Norwegian School of Economics (NHH) - Department of Economics

Date Written: March 25, 2014

Abstract

This paper deals with the enforcement of merger policy, and aims to study how merger remedies affect the deterrence accomplished by controlling mergers. We determine the optimal frequency of investigations launched by the agency, and identify situations where the introduction of remedies can lead to a lower welfare. We find that the potential for remedies can make it less likely that the worst mergers are deterred. Even if the worst mergers are deterred, the potential for remedies can lead to more mergers with a negative impact to be proposed, and eventually to more decision errors by the antitrust authorities.

Keywords: merger control, merger remedies, enforcement, deterrence

JEL Classification: K21, L41

Suggested Citation

Cosnita, Andreea and Sorgard, Lars, Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare? (March 25, 2014). NHH Dept. of Economics Discussion Paper No. 07/2014, Available at SSRN: https://ssrn.com/abstract=2432888 or http://dx.doi.org/10.2139/ssrn.2432888

Andreea Cosnita

Université Paris I Panthéon-Sorbonne - Maison des Sciences Economiques ( email )

106/112 boulevard de l'Hopital
Paris Cedex 13, 75647
France

Lars Sorgard (Contact Author)

Norwegian School of Economics and Business Administration (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway
+47 5 595 9723 (Phone)
+47 5 595 9543 (Fax)

Norwegian School of Economics (NHH) - Department of Economics

Helleveien 30
N-5035 Bergen
Norway

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
131
Abstract Views
843
rank
235,959
PlumX Metrics