Working Paper No. 719

Asymmetric Collusion and Merger Policy

Published: September 25, 2007Pages: 31Keywords: Collusion; Cost Asymmetries; Merger PolicyJEL-codes: D43; L41
Published version

Asymmetric Collusion and Merger Policy Mattias Ganslandt, Lars Persson and Helder Vasconcelos


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.

 

Lars Persson

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Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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