On the desirability of an efficiency defense in merger control

Arbeitspapier

We develop a model in which two firms that have proposed to merge are privately informed about merger-specific efficiencies. This enables the firms to influence the merger control procedure by strategically revealing their information to an antitrust authority. Although the information improves upon the quality of the authority's decision, the influence activities may be detrimental to welfare if information processing/gathering is excessively costly. Whether this is the case depends on the merger control institution and, in particular, whether it involves an efficiency defense. We derive the optimal institution and provide conditions under which an efficiency defense is desirable. We also discuss the implications for antitrust policy and outline a three-step procedure that take the influence activities into consideration.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 02-08

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Asymmetric and Private Information; Mechanism Design ; Antitrust Law ; Antitrust Issues and Policies: General
• Subject: Lobbying ; rent seeking ; asymmetric information ; disclosure ; efficiency gains ; antitrust

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lagerlöf, Johan ; Heidhues, Paul
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/50961
• Last update: 10.03.2025, 11:43 AM CET