This paper lays out and extends a derivation of the “upward pricing pressure” (“UPP”) tool for analyzing unilateral competitive effects of horizontal mergers on differentiated products that is featured in the 2010 Guidelines. In the most novel extension, the merger alters the differentiated products’ qualities. The resulting tool analyzes whether the merger creates upward pressure on quality-adjusted or “hedonic” prices. Another extension applies where one firm acquires just a partial equity stake in a competing firm. The paper also develops the Gross Upward Market Power Pressure Index (GUMPPI) that generalizes UPP measures to include output as well as price effects.
Review of Industrial Organization – Springer Journals
Published: Jul 13, 2011
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