Posted: 12 Aug 2006
In Goppelsroeder, Schinkel and Tuinstra (2006) we introduce the Werden-Froeb-index (WFI) to assist in evaluating merger-specific efficiencies in horizontal mergers. The index measures the average reduction in marginal costs required to compensate the anticompetitive effects of the merger and restore pre-merger equilibrium prices and quantities. This companion trial online software calculates the Werden-Froeb-index (WFI) for full mergers between firms that compete on prices (Bertrand competition). Required inputs are (current) sales volumes, unit prices, and the own- and cross-price-elasticities of those commodities involved in the merger. Output is a full report on compensating marginal cost reductions per product, required post-merger marginal costs, and the WFI.
Keywords: Mergers, merger control, efficiency defense, WFI, software
JEL Classification: L100, L400, C430
Suggested Citation: Suggested Citation