Upward pricing pressure in mergers of capacity‐constrained firms.
Merging firms regularly argue that mergers involving capacity‐constrained firms are unlikely to be anticompetitive, because a capacity‐constrained firm does not represent a meaningful competitive constraint on its rivals. We construct a modified notion of upward pricing pressure called ccGUPPI, or c...
| Publicado en: | Economic Inquiry Vol. 59; no. 4; pp. 1723 - 1748 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Oct2021
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=152634444&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 152634444 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Oct2021 vid: 59 iid: 4 pid: 480 pub: Wiley-Blackwell artinfo: ui: 152634444 10.1111/ecin.12999 ppf: 1723 ppct: 25 formats: fmt: @attributes: type: P size: 1.3MB tig: atl: Upward pricing pressure in mergers of capacity‐constrained firms. aug: au: Greenfield, Daniel Sandford, Jeremy A. affil: Bureau of Economics, Federal Trade Commission, Washington District of Columbia, , USA su: Monte Carlo method Price increases sug: subj: Monte Carlo method Price increases keyword: antitrust capacity constraints mergers antitrust capacity constraints mergers ab: Merging firms regularly argue that mergers involving capacity‐constrained firms are unlikely to be anticompetitive, because a capacity‐constrained firm does not represent a meaningful competitive constraint on its rivals. We construct a modified notion of upward pricing pressure called ccGUPPI, or capacity‐constrained GUPPI, which accounts for upward pricing pressure from binding capacity constraints, in addition to standard merger effects. We show that the pricing pressure terms underlying ccGUPPI, calculated using premerger data, are sufficient to determine whether a merger of capacity‐constrained firms will increase price, irrespective of the functional form of demand. Further, using Monte Carlo simulation, we show that ccGUPPI is generally a useful proxy for actual price effects, with lower informational requirements than full merger simulation. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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