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We extend the literature on exclusive dealing by allowing the incumbent and the potential entrant to merge. This uncovers new effects. First, exclusive deals can be used to improve the incumbent’s bargaining position in the merger negotiation. Second, the incumbent finds it easier to elicit...
Persistent link: https://www.econbiz.de/10005504295
We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it...
Persistent link: https://www.econbiz.de/10004973970
An antitrust authority deters collusion using fines and a leniency program. Unlike in most of the earlier literature, our firms have imperfect cumulative evidence of the collusion. That is, cartel conviction is not automatic if one firm reports: reporting makes conviction only more likely, the...
Persistent link: https://www.econbiz.de/10011083745
In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple...
Persistent link: https://www.econbiz.de/10011084408
We develop a model in which two firms that have proposed to merge are privately informed about merger-specific efficiencies. This enables the firms to influence the merger control procedure by strategically revealing their information to an antitrust authority. Although the information improves...
Persistent link: https://www.econbiz.de/10005067524
This paper investigates the activities of the Bulgarian competition office, the Commission for the Protection of Competition, during 1991–5. Descriptive statistics are provided on the industry incidence of investigations, the types of behaviour that were investigated, and the frequency with...
Persistent link: https://www.econbiz.de/10005656340
This essay describes an approach for designing antitrust rules for assessing whether firms have engaged in anticompetitive unilateral practices that is based in part on the error-cost framework pioneered by Judge Easterbrook. We focus particularly on the role of economic theory and evidence in...
Persistent link: https://www.econbiz.de/10005666549
Theoretical IO models of horizontal mergers and acquisitions make the critical assumption of efficiency gains. Without efficiency gains, these models predict either that mergers are not profitable or that mergers are welfare reducing. A problem here is the empirical observation that on average...
Persistent link: https://www.econbiz.de/10005789008
Antitrust policy involves not just the regulation of anti-competitive behavior, but also an important deterrence effect. Neither scholars nor policymakers have fully researched the deterrence effects of merger policy tools, as they have been unable to empirically measure these effects. We...
Persistent link: https://www.econbiz.de/10005791805
European competition laws condemn as ‘exploitative abuses’ the pricing policies of dominant firms that may result in a direct loss of consumer welfare. Article 82(a) of the EC Treaty, for example, expressly states that imposing ‘unfair’ prices on consumers by dominant suppliers...
Persistent link: https://www.econbiz.de/10005791920