Proper Treatment of Buyer Power in Merger Review

Proper Treatment of Buyer Power in Merger Review In this paper, we assess the appropriate treatment of buyer power in merger review. We conclude that, for changes in bargaining outcomes due to a buyer merger to create efficiencies, it must be the case that, post-merger, the parties are able to arrive at a more optimal price schedule, perhaps due to reduced transactions costs. Empirical tests will be important to the evaluation of such efficiencies. We further conclude that, under certain conditions, powerful buyers may be able to prevent higher prices from a merger of suppliers. Once again, empirical tests should guide the evaluation of this merger defense. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Proper Treatment of Buyer Power in Merger Review

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Publisher
Springer US
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-011-9313-9
Publisher site
See Article on Publisher Site

Abstract

In this paper, we assess the appropriate treatment of buyer power in merger review. We conclude that, for changes in bargaining outcomes due to a buyer merger to create efficiencies, it must be the case that, post-merger, the parties are able to arrive at a more optimal price schedule, perhaps due to reduced transactions costs. Empirical tests will be important to the evaluation of such efficiencies. We further conclude that, under certain conditions, powerful buyers may be able to prevent higher prices from a merger of suppliers. Once again, empirical tests should guide the evaluation of this merger defense.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jul 22, 2011

References

  • Pivotal buyers and bargaining position
    Raskovich, A.

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