Unilateral Competitive Effects of Mergers: Upward Pricing Pressure, Product Quality, and Other Extensions

Unilateral Competitive Effects of Mergers: Upward Pricing Pressure, Product Quality, and Other... 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Unilateral Competitive Effects of Mergers: Upward Pricing Pressure, Product Quality, and Other Extensions

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Publisher
Springer Journals
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/s11151-011-9307-7
Publisher site
See Article on Publisher Site

Abstract

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.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jul 13, 2011

References

  • Revising the horizontal merger guidelines
    Carlton, D. W.
  • Linear demand systems are inconsistent with discrete choice
    Jaffe, S; Weyl, E. G.

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