Contestability and Regulation Revisited and Applications to Pro-Competitive Mergers

15 Pages Posted: 7 Mar 2007  

Michael J. Ryan

Hull University Business School (HUBS)

Date Written: 2007

Abstract

The purpose of this paper is to revisit the contestability idea and to formalize distinctions between industrial contestability and market contestability (analogous to those between industrial and market diversification) as well as the definition of regulated contestability. Applications to mergers and merger policy are then developed in a context of positive spillovers, with reference to brand enhancing effects and with reference to R&D and other cost reducing effects. A major conclusion of the paper is that, far from raising barriers to entry, mergers may have contestability enhancing effects and in such cases should be actively encouraged by regulators.

Keywords: Contestability, Spillovers, Mergers, EU Policy

JEL Classification: L13, L51

Suggested Citation

Ryan, Michael J., Contestability and Regulation Revisited and Applications to Pro-Competitive Mergers (2007). Available at SSRN: https://ssrn.com/abstract=968925 or http://dx.doi.org/10.2139/ssrn.968925

Michael J. Ryan (Contact Author)

Hull University Business School (HUBS) ( email )

Hull, HU6 7RX
United Kingdom

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