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Unilateral Effects Analysis in Differentiated Product Markets: Guidelines, Policy, and Change

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  • Malcolm Coate
  • Shawn Ulrick

Abstract

The Merger Guidelines highlight unilateral effects analysis as the primary anticompetitive theory in differentiated product markets. This study evaluates the Federal Trade Commission’s historical record to determine what considerations drive the internal review process, if these considerations depend on the type of competition within the differentiated market under review, and if policy has changed much over the 20 years since the 1992 Merger Guidelines were issued. The results identify the importance of price-based competition to the analysis, as markets that are characterized by price competition tend to generate significantly higher estimates for the probability of a unilateral effects finding, all else equal, especially when repositioning is difficult. Moreover, a little fluctuation is detected in policy, but no real evidence of change over the 20-year period of the study exists. Copyright Springer Science+Business Media New York (outside the USA) 2016

Suggested Citation

  • Malcolm Coate & Shawn Ulrick, 2016. "Unilateral Effects Analysis in Differentiated Product Markets: Guidelines, Policy, and Change," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(1), pages 45-68, February.
    • Handle: RePEc:kap:revind:v:48:y:2016:i:1:p:45-68
    DOI: 10.1007/s11151-015-9478-8
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