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Department of Economics, Norwegian School of Economics (NHH) Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics (NHH)

No 7/2014:
Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?

Andreea Cosnita-Langlais () and Lars Sørgard ()

Abstract: This paper deals with the enforcement of merger policy, and aims to study how merger emedies affect the deterrence accomplished by controlling mergers. We determine the optimal frequency of investigations launched by the agency, and identify situations where the introduction of remedies can lead to a lower welfare. We find that the potential for remedies can make it less likely that the worst mergers are deterred. Even if the worst mergers are deterred, the potential for remedies can lead to more mergers with a negative impact to be proposed, and eventually to more decision errors by the antitrust authorities.

Keywords: Merger control; merger remedies; enforcement; deterrence.; (follow links to similar papers)

JEL-Codes: K21; L41; (follow links to similar papers)

26 pages, March 25, 2014

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