|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.
|Norwegian School of Economics and Business Administration. Department of Economics
|Optimal merger policy
|VDP::Samfunnsvitenskap: 200::Økonomi: 210::Samfunnsøkonomi: 212