To Merge or Not to Merge: That is the Question
CEPR Working Paper No. 2190
Posted: 17 Sep 1999
Date Written: July 1999
Abstract
In this paper we analyze the implementation of socially optimal mergers when the regulator is not informed about the parameters that determine social and private gains from potential mergers. We find that most of the standard tools in dominant strategy implementation, like the revelation principle or the Vickrey Clarke-Groves mechanism can not be applied in our framework. We show that implementation in dominant strategies of the optimal merger policy without budget balance is possible under an additional assumption. The same assumption makes possible the implementation in Nash equilibrium of the optimal merger policy with budget balance.
JEL Classification: L11
Suggested Citation: Suggested Citation