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Asymmetric Collusion and Merger Policy

Author

Listed:
  • Ganslandt, Mattias

    (Research Institute of Industrial Economics (IFN))

  • Persson, Lars

    (Research Institute of Industrial Economics (IFN))

  • Vasconcelos, Helder

    (IGIER, Università Bocconi)

Abstract

In their merger control, EU and the US have considered symmetric size distribution (cost structure) of firms to be a factor potentially leading to collusion. We show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with higher risk of collusion, when firms face indivisible costs of collusion. In particular, we show that if the rule determining the collusive outcome has the property that the large (efficient) firm benefits sufficiently more from collusion when industry asymmetries increase, collusion can become more likely when firms are moderately asymmetric.

Suggested Citation

  • Ganslandt, Mattias & Persson, Lars & Vasconcelos, Helder, 2007. "Asymmetric Collusion and Merger Policy," Working Paper Series 719, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0719
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    References listed on IDEAS

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    More about this item

    Keywords

    Collusion; Cost Asymmetries; Merger Policy;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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