Unpublished Paper
Socially Beneficial Mergers: A New Class of Concentration Indices
Florida International University, Department of Economics Working Papers Series 0504
(2005)
Abstract
The prominent Herfindahl-Hirschman index (HHI), yields a higher concentration level in response to any merger between firms, implying that any merger will decrease the social welfare. Although HHI is used by the Anti-trust Division of the U.S. Department of Justice (AD-DoJ), its merger implications are not fully embraced by the anti-trust authorities. We propose a class of concentration indices that is in line with the spirit of the AD-DoJ's merger policies and consider different theoretical models which indicate that the AD-DoJ is justified in allowing mergers especially among smaller firms, as they counter the market power of dominant firms.
Keywords
- Horizontal Mergers,
- Industry Concentration,
- the Anti-Trust Division,
- Hirfindahl-Hirschman Index (HHI),
- Dominant Firm(s)
Disciplines
Publication Date
2005
Citation Information
Nejat Anbarci and Brett E. Katzman. "Socially Beneficial Mergers: A New Class of Concentration Indices" Florida International University, Department of Economics Working Papers Series 0504 (2005) Available at: http://works.bepress.com/brett_katzman/15/