Friday, November 2, 2007
Posted by D. Daniel Sokol
Andrei Medvedev of the Competition Policy Centre at the University of East Anlgia provides a sense of Structural Remedies in Merger Regulation in a Cournot Framework.
ABSTRACT: To prevent possible abuse of market power in the future an antitrust agency can force merging firms to divest some of their assets. The divested assets can be sold via auction either to existing competitors or to a new entrant. Divesture of assets extends the range of parameters when a merger satisfies a consumer surplus standard and should be approved. If the agency takes a more active stance toward the selection of a purchaser of the assets, then it could lead to a favorable outcome for consumers and merging firms.