Friday, May 25, 2018
Tommaso M. Valletti, Imperial College Business School; University of Rome, Tor Vergata - Department of Financial and Quantitative Economics; Centre for Economic Policy Research (CEPR) and Hans Zenger, European Union - Directorate General for Competition ask Should Profit Margins Play a More Decisive Role in Merger Control? - A Rejoinder to Jorge Padilla.
ABSTRACT: According to empirical research, recent times have seen a significant increase in firms' profit margins. Higher profit margins are a reflection of increased pricing power.
Prospective mergers are more likely to cause competition concerns the higher firms' pricing power is to begin with.