Antitrust Guidelines: A Simple Operational Method for Evaluating Horizontal Mergers

21 Pages Posted: 21 Jul 2009

See all articles by Davide Dragone

Davide Dragone

University of Bologna - Department of Economics

Luca Lambertini

University of Bologna - Department of Economics

Andrea Mantovani

Catholic University of Louvain

Date Written: December 3, 2007

Abstract

We reexamine the profitability and social efficiency of horizontal mergers in a Cournot oligopoly with decreasing average costs. Assuming the merger allows for efficiency gains in production, we identify the conditions under which the merger is, respectively, profitable and socially desirable. The economic preditions of the model are contrasted with FTC guidelines, based on a simple method that allows to forecast the economic consequances of a merger in terms of ex ante observables. This comparative assessment highlights the existence of well defined parameter regions where FTC guidelines lead to systematic errors

Keywords: horizontal merger, oligopoly, efficiency

JEL Classification: D43, G34, L13

Suggested Citation

Dragone, Davide and Lambertini, Luca and Mantovani, Andrea, Antitrust Guidelines: A Simple Operational Method for Evaluating Horizontal Mergers (December 3, 2007). Available at SSRN: https://ssrn.com/abstract=1188505 or http://dx.doi.org/10.2139/ssrn.1188505

Davide Dragone

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy
0039.051.2098880 (Phone)

HOME PAGE: http://https://www.unibo.it/sitoweb/davide.dragone/en

Luca Lambertini (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092600 (Phone)
+39 051 2092664 (Fax)

Andrea Mantovani

Catholic University of Louvain ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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