Concentration Thresholds for Horizontal Mergers
Name
aer.20201038.pdf
Description
Published version
Size
2.04 MB
Format
Adobe PDF
Checksum (MD5)
df74008fd71e3afabca1f1500826bead
Author(s)
Nocke, Volker
Whinston, Michael D
Date Issued
June 1, 2022
Journal
American Economic Review
Publisher
American Economic Association
Citation
Nocke, Volker and Whinston, Michael D. 2022. "Concentration Thresholds for Horizontal Mergers." American Economic Review, 112 (6).
Version
Final published version
Abstract
Concentration-based thresholds for horizontal mergers, such as those in the US Horizontal Merger Guidelines, play a central role in merger analysis but their basis remains unclear. We show that there is both a theoretical and an empirical basis for focusing solely on the change in concentration, and ignoring its level, in screening mergers for whether their unilateral price effects will harm consumers. We also argue that current threshold levels likely are too lax, unless one expects efficiency gains of 5 percent or greater, or other factors such as entry and product repositioning to significantly constrain the exercise of market power postmerger. (JEL D43, G34, G38, K21, L13, L41)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/aer.20201038
