| NOTAS: | "This paper studies the role of the failing firm defense (FFD) concept in merger
control in a Cournot setting where: (i) endogenous mergers are motivated by
prospective efficiency gains; and (ii) mergers must be submitted to an Antitrust
Authority which might require partial divestiture for approval. It is shown that
when the FFD concept is available in merger control, firms can strategically
embark on a merger which makes other firms fail and then buy over the
exiting outsider firm(s), leading to complete monopolization of the industry.
This in turn implies that, in some circumstances, the consumers'-surplusmaximizing
market structure cannot be achieved if the FFD concept is
available, whereas it would be achieved if the FFD concept were ruled out." |
