Assessing Unilateral Pricing Incentives Following a Horizontal Merger – The Role of Efficiency Gains

Abstract:

To overcome the limitations of traditional tools used in merger evaluation, significant work has been done during the last period on developing economic methods for merger effects assessment. In this paper we will focus on the analysis of unilateral effects in markets with differentiated products. We present a practical way of assessing these effects based on merger-induced cost reduction evaluation in a relevant market where companies selling differentiated products are engaged in Bertrand competition.