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A Consumer Surplus Defense in Merger Control

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  • Fridolfsson, Sven-Olof

    (Research Institute of Industrial Economics)

Abstract

A government wanting to promote an efficient allocation of resources as measured by the total surplus, should strategically delegate to its competition authority a welfare standard with a bias in favour of consumers. A consumer bias means that some welfare increasing mergers will be blocked. This is optimal, if the relevant alternative to the merger is another change in market structure that will even further increase the total surplus. Furthermore, a consumer bias is shown to enhance welfare even though it blocks some welfare increasing mergers when the relevant alternative is the status quo.

Suggested Citation

  • Fridolfsson, Sven-Olof, 2007. "A Consumer Surplus Defense in Merger Control," Working Paper Series 686, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0686
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    Cited by:

    1. Russell Pittman, 2007. "Consumer Surplus as the Appropriate Standard for Antitrust Enforcement," EAG Discussions Papers 200709, Department of Justice, Antitrust Division.
    2. Mark Armstrong & John Vickers, 2010. "A Model of Delegated Project Choice," Econometrica, Econometric Society, vol. 78(1), pages 213-244, January.
    3. Chiara Fumagalli & Massimo Motta & Lars Persson, 2009. "On The Anticompetitive Effect Of Exclusive Dealing When Entry By Merger Is Possible," Journal of Industrial Economics, Wiley Blackwell, vol. 57(4), pages 785-811, December.
    4. Marco Pagnozzi & Antonio Rosato, 2014. "Entry by Takeover: Auctions vs. Negotiations," CSEF Working Papers 353, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    5. Germán Bet & Roger D. Blair, 2019. "Williamson’s Welfare Trade-Off Around the World," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(3), pages 515-533, November.
    6. Kamerbeek, S.P., 2009. "Merger Performance and Efficiencies in Horizontal Merger Policy in the US and the EU," MPRA Paper 18064, University Library of Munich, Germany.
    7. Katalin Katona & Marcel Canoy, 2013. "Welfare standards in hospital mergers," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(4), pages 573-586, August.
    8. Miguel González-Maestre & Lluís M. Granero, 2016. "Merger policy in innovative industries," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 15(3), pages 131-147, December.
    9. Brito Duarte & Pereira Pedro & Vareda João, 2013. "Investment, Dynamic Consistency and the Sectoral Regulator’s Objective," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(2), pages 563-594, August.
    10. John Vickers & Mark Armstrong, 2007. "A Model of Delegated Project Choice With Application to Merger Policy," Economics Series Working Papers 347, University of Oxford, Department of Economics.
    11. Bakaouka, Elpiniki & Escrihuela-Villar, Marc & Ferrarese, Walter, 2024. "Horizontal mergers with Bertrand competition and convex costs," Mathematical Social Sciences, Elsevier, vol. 128(C), pages 60-67.
    12. Katona, Katalin, 2019. "Managed competition in practice : Lessons for healthcare policy," Other publications TiSEM 2c2dd13d-91a8-4706-b705-9, Tilburg University, School of Economics and Management.
    13. Marc Fusaro & Richard Ericson, 2010. "The Welfare Economics of “Bounce Protection” Programs," Journal of Consumer Policy, Springer, vol. 33(1), pages 55-73, March.
    14. Fridolfsson, Sven-Olof, 2007. "Anti- versus Pro-Competitive Mergers," Working Paper Series 694, Research Institute of Industrial Economics.

    More about this item

    Keywords

    Merger Control; Competition Policy; Consumer Surplus;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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