Coordinated Interaction and Clayton Section 7 Enforcement

36 Pages Posted: 13 May 2003

See all articles by Stuart D. Gurrea

Stuart D. Gurrea

Economists Incorporated

Bruce M. Owen

Stanford University

Date Written: May 2003

Abstract

When proposed mergers are reviewed by antitrust authorities in the United States they are examined for possible adverse effects on competition and on consumers. Two varieties of adverse results are considered: coordinated interaction and unilateral effects. The first is a possible increase in cooperation among firms attributable to the elimination of a competitor. The second is the incentive to increase price unilaterally that arises when a close competitor is integrated. Recently, enforcement authorities have suggested greater attention to coordinated interaction. This paper reviews the recent history of anti-merger law enforcement and explores the economic basis, chiefly in game theory, for predicting the effects of mergers on coordinated interaction. Economic theory is found to provide weaker support for predicting the effects of mergers on coordinated interaction than for predicting unilateral effects. Recent advances in relevant experimental research are also discussed, and the possible usefulness of a competitive altruism/spite index (CASI) as a summary of a market's supply-side behavior is explored.

Suggested Citation

Gurrea, Stuart D. and Owen, Bruce M., Coordinated Interaction and Clayton Section 7 Enforcement (May 2003). Stanford Law and Economics Olin Working Paper No. 256; SIEPR Discussion Paper No. 02-26. Available at SSRN: https://ssrn.com/abstract=406840 or http://dx.doi.org/10.2139/ssrn.406840

Stuart D. Gurrea

Economists Incorporated ( email )

Emery Station North
5980 Horton Street, Suite 250
Emeryville, CA 94608
United States

Bruce M. Owen (Contact Author)

Stanford University ( email )

366 Galvez Street
Stanford, CA 94305-6015
United States

HOME PAGE: http://siepr.stanford.edu/

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