Bargaining Over Remedies in Merger Regulation
CCP Working Paper No. 07-3
27 Pages Posted: 20 Mar 2007
Date Written: February 2007
This paper provides a first attempt to understand how outcomes are determined by the standard institutions of merger control. In particular, we focus on the internationally standard 2-phase investigation structure and remedy negotiations of the form practiced by the EC. We find that there are inherent biases in remedy outcomes, and identifiable circumstances where offers will be excessive and where they will be deficient. In particular, we find clear circumstances in which firms offer excessive remedies, which goes against a possible intuition that firms should expect to extract an information rent for possessing superior information about competition in the market.
Keywords: Merger regulation, merger remedies, competition policy, bargaining
JEL Classification: K21, L41, L51
Suggested Citation: Suggested Citation