cGUPPI: Scoring Incentives to Engage in Parallel Accommodating Conduct

33 Pages Posted: 9 Aug 2015 Last revised: 19 Aug 2015

See all articles by Serge Moresi

Serge Moresi

Charles River Associates (CRA)

David Reitman

Charles River Associates, Inc.

Steven C. Salop

Georgetown University Law Center

Yianis Sarafidis

Charles River Associates (CRA)

Date Written: August 14, 2015

Abstract

We propose an index for scoring coordination incentives, which we call the “coordination GUPPI” or cGUPPI. While the cGUPPI can be applied to a wide range of coordinated effects concerns, it is particularly relevant for gauging concerns of parallel accommodating conduct (PAC), a concept that received due prominence in the 2010 U.S. Horizontal Merger Guidelines. PAC is a type of coordinated conduct whereby a firm raises price with the expectation — but without any prior agreement — that one or more other firms will follow and match the price increase. The cGUPPI is the highest uniform price increase that all the would-be coordinating firms would be willing to implement without side payments. A larger cGUPPI implies a more pronounced incentive and ability for firms to engage in coordinated price increases. The difference between the post- and pre-merger cGUPPI (i.e. the Delta cGUPPI) is a practical way to score the effect of a merger on coordinated effects concerns.

Keywords: antitrust, merger, coordinated effects, collusion, incentives, GUPPI

JEL Classification: K20, K21, K29, L40

Suggested Citation

Moresi, Serge and Reitman, David and Salop, Steven C. and Sarafidis, Yianis, cGUPPI: Scoring Incentives to Engage in Parallel Accommodating Conduct (August 14, 2015). Available at SSRN: https://ssrn.com/abstract=2640962 or http://dx.doi.org/10.2139/ssrn.2640962

Serge Moresi

Charles River Associates (CRA) ( email )

1201 F Street, NW
Suite 700
Washington, DC 20004
United States
(202)662-3847 (Phone)

David Reitman

Charles River Associates, Inc. ( email )

1201 F Street, N.W., Suite 700
Washington, DC 20004-1204
United States

Steven C. Salop (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States
202-662-9095 (Phone)
202-662-9497 (Fax)

Yianis Sarafidis

Charles River Associates (CRA) ( email )

1201 F. St. NW
Ste. 700
Washington, DC 20004
United States

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