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Efficiency Defense in EU and US Horizontal Merger Control if Costs are Endogenous
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Manfred Neumann
Published/Copyright:
November 30, 2019
Abstract
If fixed costs are endogenous, following from profit maximization, horizontal mergers are always profitable. They cause the price to rise and consumer surplus to decrease. A case of horizontal merger in which, according to the requirement of US and EU Merger Guidelines for an efficiency defense to be acceptable, the price declines or remains constant does not exist and therefore cannot be expected by profit maximizing partners to arise following a merger. Merger control should be guided by focusing on total welfare. Permitting cooperation in R&D, although profitable, is likely to be detrimental to welfare.
Keywords: Horizontal merger control; efficiency defense
Published Online: 2019-11-30
Published in Print: 2016-02-01
© 2019 by Walter de Gruyter Berlin/Boston
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Articles in the same Issue
- The Role of Migration in the Variety and Quality of Trade: Evidence from Germany
- Status Goods and Market Powers
- Contributing for Myself, but Free riding for My Group?
- Efficiency Defense in EU and US Horizontal Merger Control if Costs are Endogenous
- Analyzing Educational Achievement Differences between Second-Generation Immigrants: Comparing Germany and German-Speaking Switzerland
- Vertically Linked Industries, Product Quality and Minimum Quality Standards
- NAIRU Estimates for Germany: New Evidence on the Inflation–Unemployment Tradeoff
