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Reevaluating Merger Guidelines for the New Economy

29 Pages Posted: 1 Feb 2007  

Ki-Eun Rhee

KDI School of Public Policy and Management

Date Written: December 2006

Abstract

The inherent dynamic competitiveness of the new economy brings about novel challenges to antitrust enforcements. We evaluate the appropriateness of the 1992 Horizontal Merger Guidelines in light of this new environment. We show that the Guidelines relies too heavily on market concentration measures that are bound to be overstated for new-economy industries. To properly address the dynamic competitiveness of the market, we suggest that the Guidelines should (i) explicitly consider innovation markets in the market-defining process, (ii) pay attention to entry conditions as the most important standard for assessing competitiveness, (iii) examine demand-side volatilities when assessing likeliness of entries, and (iv) use less strict standards for substantiating efficiency gains.

Keywords: horizontal merger, antitrust, new economy

JEL Classification: K21

Suggested Citation

Rhee, Ki-Eun, Reevaluating Merger Guidelines for the New Economy (December 2006). KDI School of Pub Policy & Management Paper No. 06-18. Available at SSRN: https://ssrn.com/abstract=960177 or http://dx.doi.org/10.2139/ssrn.960177

Ki-Eun Rhee (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

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