Vurdering af de nye analyseredskaber UPP og IPR i fusionskontrollen: Økonomiske analyser af priseffekterne ved horisontale fusioner med differentierede produkter

Amalie Boots Gjerding

Student thesis: Master thesis

Abstract

This thesis investigates the unilateral price effects of horizontal mergers with differentiated products. Until recently there have not been any effective antitrust tools, which have been able to evaluate whether a proposed merger is likely to raise prices through unilateral effects. But in 2010 the economists Carl Shapiro and Joseph Farrell published a paper, in which they describe the new antitrust tools Upward Pricing Pressure and Illustrative Price Rise (hereafter UPP and IPR). The new antitrust tools are able to analyze the unilateral price effects of a horizontal merger with differentiated products. The UPP tool specifies whether the unilateral price effects of the merger are ascending or descending, and the IPR specify the level of the price effects. To understand the tools it is necessary to know the concept of diversion ratios, and therefor diversion ratio will be discussed in this thesis. This thesis evaluates UPP and IPR and compares the methods with a merger simulation, which is a similar methodology. The merger simulation is done under the same assumptions as taken in UPP and IPR, and therefore it is possible to compare and evaluate whether the methods are useful. In the merger simulation it was necessary to take some assumptions, so the result of the simulation is not completely accurate. But the result of the simulation showed, that the IPR may underestimate the unilateral price effect of the merger. The conclusion in this thesis is that the new antitrust tools, UPP and IPR, are useful, but you need to analyze the results of the tools with some reservations.

EducationsMSc in Business Administration and Management Science, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2015
Number of pages94