In this issue:
Competition authorities are looking hard at the economic theories that underlie the empirical analysis they use when evaluating mergers. With their recent merger guidelines, both the EC and U.S. competition authorities have introduced new methodology and emphasis—raising a lively debate in the process. This issue looks at the state of the art in merger analysis, seeking to answer the question: Just what are the best tools to use to predict the competitive effects of mergers?
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What’s Up With Merger Analysis?
Margin of Error: The Flawed Paradigm in the New Merger Guidelines
The analytical core of the new Guidelines relies on an assumption that was long ago shown to be invalid. Michael G. Baumann (Economists Inc.) & Paul E. Godek (Compass Lexecon)
Use and Misuse of Empirical Methods in the Economics of Antitrust
Discussing some of the theoretical and empirical strengths and weaknesses of the approaches to antitrust analysis, including a critique of some of the recent methods. Dennis Carlton (Univ. of Chicago)
Price Theory and Merger Guidelines
Our work extends existing first-order approaches to merger analysis to provide quantitative estimates of price and consumer surplus changes. Sonia Jaffe & E. Glen Weyl (Harvard Univ.)
Upward Price Pressure, Merger Simulation, and Merger Simulation Light
Considering the advantages and limitations of implementing UPP in practice, discussing the relationship between UPP and merger simulation, and ultimately arguing in favor of a “merger simulation light” style screen. Michael D. Noel (Univ. of Calif.,San Diego)
New Tools for Competitive Effects: Do We Really Know What Works Best?
Summarizing efforts to evaluate empirically the relative strengths and weaknesses of the empirical techniques used to analyze theories of unilateral effects. G. Steven Olley (NERA)
The Use of Empirical Techniques in European Commission Merger Cases
Reviewing the main empirical analyses applied by the European Commission in recent merger cases, focusing on unilateral effects cases. Jan Peter van der Veer (RBB Economics)
