Posted by Social Science Research Network
Horizontal Mergers in Optimal Auctions
Luke Froeb (Vanderbilt University), Vlad Mares (INSEAD) & Steven Tschantz (Vanderbilt University)
Abstract: In this paper we study the impact of mergers among bidders when the auctioneer can respond optimally to changes in the market concentration. We find that the auctioneer’s ability to exercise such “buyer power” limits the ability of the merged bidders to exercise “market power.” In particular, while mergers always harm the auctioneer, the magnitude of the harm is much smaller than in an open auction benchmark. Bidder concentration matters but is less important than the auctioneer’s reservation utility. We also find that mergers benefit non-merging bidders, and will become unprofitable when the potential surplus is small enough. Welfare effects are complex as they depend both on the profile of the merging parties as well as on the auctioneer’s reservation utility.
Featured News
Nvidia’s $700 Million Buyout of Run:ai Gets EU Approval, Deal Finalized
Jan 1, 2025 by
CPI
Taiwan FTC Halts Uber’s $950M Foodpanda Buyout Over Antitrust Fears
Jan 1, 2025 by
CPI
White House Pushes for Stronger Healthcare Data Security
Jan 1, 2025 by
CPI
Microsoft’s Cybersecurity Bundles Draw Antitrust Inquiry
Jan 1, 2025 by
CPI
UK Watchdog to Review IBM’s $6.4 Billion Acquisition of HashiCorp
Jan 1, 2025 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – CRESSE Insights
Dec 19, 2024 by
CPI
Effective Interoperability in Mobile Ecosystems: EU Competition Law Versus Regulation
Dec 19, 2024 by
Giuseppe Colangelo
The Use of Empirical Evidence in Antitrust: Trends, Challenges, and a Path Forward
Dec 19, 2024 by
Eliana Garces
Some Empirical Evidence on the Role of Presumptions and Evidentiary Standards on Antitrust (Under)Enforcement: Is the EC’s New Communication on Art.102 in the Right Direction?
Dec 19, 2024 by
Yannis Katsoulacos
The EC’s Draft Guidelines on the Application of Article 102 TFEU: An Economic Perspective
Dec 19, 2024 by
Benoit Durand