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A Note on Upward Pricing Pressure:The possibility of false positives

Author

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  • Mathiesen, Lars

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Nilsen, Øivind Anti

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Sørgard, Lars

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

Farrell and Shapiro proposed a simple test of the possible upward pricing pressure (UPP) following a merger. They showed that the test may give false negatives, that is, indicate that a merger may not give an UPP, while a more comprehensive test would indicate the opposite. We show that their test applied to a case with asymmetric firms may give false positives.

Suggested Citation

  • Mathiesen, Lars & Nilsen, Øivind Anti & Sørgard, Lars, 2012. "A Note on Upward Pricing Pressure:The possibility of false positives," Discussion Paper Series in Economics 11/2012, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2012_011
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    Cited by:

    1. Brijesh P. Pinto & David S. Sibley, 2016. "Unilateral Effects with Endogenous Quality," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(3), pages 449-464, November.
    2. Cosnita-Langlais, Andreea & Johansen, Bjørn Olav & Sørgard, Lars, 2021. "Upward pricing pressure in two-sided markets: Incorporating rebalancing effects," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    3. Panagiotis N. Fotis & Michael L. Polemis & Konstantinos Eleftheriou, 2017. "Unilateral effects of partial acquisitions: consistent calculation of GUPPI under horizontal merger guidelines within the EU," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(3), pages 315-325, September.
    4. Andreea Cosnita-Langlais & Bjørn Olav Johansen & Lars Sorgard, 2018. "Upward Price Pressure in Two-Sided Markets: Incorporating Feedback Effects," EconomiX Working Papers 2018-3, University of Paris Nanterre, EconomiX.

    More about this item

    Keywords

    Unilateral merger effects; post-merger price effects.;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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