A note on upward pricing pressure : the possibility of false positives
Working paper
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Date
2012-05Metadata
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- Discussion papers (SAM) [655]
Abstract
Farrell and Shapiro proposed a simple test of the possible upward pricing pressure (UPP)
following a merger. They showed that the test may give false negatives, that is, indicate that a
merger may not give an UPP, while a more comprehensive test would indicate the opposite.
We show that their test applied to a case with asymmetric firms may give false positives.