We describe a simple initial indicator of whether a proposed merger between rivals in a differentiated product industry is likely to raise prices through unilateral effects. Our diagnostic calibrates upward pricing pressure (UPP) resulting from the merger, based on the price/cost margins of the merging firms' products and the extent of direct substitution between them. As a screen for likely unilateral effects, this approach is practical, more transparent, and better grounded in economics than are concentration-based methods.

Ed. by Cervellati, Matteo / Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Schipper, Burkhard
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Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition
1University of California, Berkeley, farrell@econ.berkeley.edu
2University of California, Berkeley, shapiro@haas.berkeley.edu
Citation Information: The B.E. Journal of Theoretical Economics. Volume 10, Issue 1, Pages –, ISSN (Online) 1935-1704, DOI: 10.2202/1935-1704.1563, March 2010
Publication History:
- Published Online:
- 2010-03-19
Keywords: mergers; antitrust; oligopoly; unilateral effects


















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