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Proper Treatment of Buyer Power in Merger Review

  • Dennis W. Carlton
  • Mark Israel
Article

Abstract

In this paper, we assess the appropriate treatment of buyer power in merger review. We conclude that, for changes in bargaining outcomes due to a buyer merger to create efficiencies, it must be the case that, post-merger, the parties are able to arrive at a more optimal price schedule, perhaps due to reduced transactions costs. Empirical tests will be important to the evaluation of such efficiencies. We further conclude that, under certain conditions, powerful buyers may be able to prevent higher prices from a merger of suppliers. Once again, empirical tests should guide the evaluation of this merger defense.

Keywords

Buyer power Merger review Monopsony 

References

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Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  1. 1.Booth School of BusinessUniversity of ChicagoChicagoUSA
  2. 2.Compass LexeconChicagoUSA
  3. 3.Compass LexeconWashingtonUSA

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