Complementarities as an Antitrust Defense

38 Pages Posted: 31 Mar 2020

See all articles by Dennis Weisman

Dennis Weisman

Kansas State University - Department of Economics

Date Written: March 5, 2020

Abstract

We employ a Cournot model with interdependent demands to explore the interaction between demand and cost complementarities in mitigating upward pricing pressure, post-merger. The analysis reveals that even substantial increases in the HHI post-merger need not raise competitive concerns when output is redistributed from single-market to multi-market providers. Furthermore, the numerical simulations indicate that there is a wide range of demand and cost complementarity parameters over which even monopolization of the market would not be expected to result in higher prices. These findings may constructively inform merger policy and provide useful context for application of the DOJ/FTC horizontal merger guidelines in an increasingly digitalized economy.

Keywords: mergers, concentration, oligopoly, complements, network industries

JEL Classification: L51, L96

Suggested Citation

Weisman, Dennis, Complementarities as an Antitrust Defense (March 5, 2020). Available at SSRN: https://ssrn.com/abstract=3549567 or http://dx.doi.org/10.2139/ssrn.3549567

Dennis Weisman (Contact Author)

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

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