Can merger remedies cause more harm than good?
Year: 2026
Type: article
Abstract: This article investigates whether merger remedies, such as divestitures, can cause more harm than good using a model of firm conduct. The model is estimated leveraging the variation generated by a large divestiture in the US beer market. First, I find that price coordination, materialized through conduct parameters, acts as a countervailing force that limits the pro-competitive effects of a divestiture. Price coordination eliminates about 80% to 133% of the welfare gains from a divestiture. Second, based on counterfactual simulations, I show that a merger cleared with divestiture is likely to reduce consumer surplus more than a merger approved without divestiture (JEL K21, L4, L13).
DOI: 10.1093/jleo/ewag006
Author: Yann Delaprez
Institution: University of Chicago
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7128719274