Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, November 19, 2008

Merger Policy to Promote 'Global Players'? A Simple Model

Posted by D. Daniel Sokol

Andreas Haufler, University of Munich - Seminar for Economic Policy and Søren Bo Nielsen, Copenhagen Business School have a new paper on Merger Policy to Promote 'Global Players'? A Simple Model.

ABSTRACT: We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyse under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we allow for multiple mergers and analyse whether national mergers, international mergers or no mergers will be the equilibrium market structure when the firms' decisions to merge are either taken non-cooperatively or cooperatively.

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