Dr. Richard Schmalensee, Director at Global Economics Group, assess whether or not a measure of upward pricing pressure (UPP) should be used to assess competitive impact of a proposed merger. In Should New Merger Guidelines Give UPP Market Definition? (Competition Policy International, 2009), Dr. Schmalensee provides a detailed economic theoretical analysis of post-merger price changes and efficiency gains with regard to UPP. Dr. Schmalensee concludes that the existing UPP approach can be improved by modifying it slightly to handle post-merger cost changes consistently and to focus directly on post-merger price changes and that it should be used carefully and with due regard for other relevant evidence.
Should New Merger Guidelines Give UPP Market Definition?
By Richard Schmalensee on March 17, 2011