Optimal merger policy
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- Discussion papers (SAM) 
The purpose of this article is to investigate the optimal merger policy in the presence of deterrence as well as type I and type II errors. We derive the optimal number of merger investigations, both when the competition authority commits to a particular activity level and when they do not commit. It is shown that no commitment can lead to a less active merger policy and lower welfare than what is the case if commitment. If commitment there will be a positive welfare effect of the merger investigations due to its deterrence effect, while the merger investigations as such might have a negative impact on welfare (enforcement effect). The results have important implications for how one should interpret the empirical studies of the effects of merger enforcement.
PublisherNorwegian School of Economics and Business Administration. Department of Economics