Vincente Lagos will defend his thesis in economics on 28/10/2016 at 4.00pm room MF 429 (Manufacture des Tabacs) on the following topics : « Essays on the Economics and Competition Assessment of Mergers».
Thesis Director: Marc IVALDI TSE researcher, Professor - University Toulouse 1 Capitole University
Jury members:
- Patrick REY, Professor, TSE researcher, Professor - University Toulouse 1 Capitole University
- Pierre DUBOIS, TSE researcher, Professor - University Toulouse 1 Capitole University
- Natalia FABRA, Professor - Universidad Carlos III de Madrid
- Joseph HARRINGTON, Professor - University of Pennsylvania
Abstract:
The main purpose of the first two chapters of this dissertation is to characterize the impact of mergers on firms’ incentives to collude, and to propose and evaluate the accuracy of different tools designed to assess the magnitude of coordinated effects. In addition, the third chapter empirically assesses the impact of a merger between two large retailers in the Chilean gasoline market, and evaluates the effectiveness of gas stations divestitures as a tool to mitigate a potential anticompetitive increase in prices. In Chapter 1 (joint with Marc Ivaldi), titled “Assessment of Post-merger Coordinated Effects: Characterization by Simulations,” I examine the link between horizontal mergers and firms’ incentives to engage in collusion, and offer a novel approach for assessing the change in the merged firm’s critical discount factor (i.e., the minimum value of the discount factor that makes collusion profitable for a given firm). Results suggest that a merger can be used as a commitment device to increase the incentives to collude of merging parties, and depending on the characteristics of each merger, either diversion ratios or cross-price elasticities can be used as assessment tools. In a similar vein, in Chapter 2 (joint with Marc Ivaldi), titled “Parallel Accommodating Conduct: Evaluating the Performance of the Coordinated Price Pressure Index,” I study the performance of an index proposed by Moresi et al. (2011), which aims at measuring the impact of mergers on firms incentives to engage in tacit coordination to increase prices. This chapter also introduces two alternative indexes that require a larger set of information. Results suggest that the CPPI index only displays a fair performance, and show that both alternative indexes outperform the original one in terms of predicting mergers that result in a significant anticompetitive effect. Finally, in Chapter 3, titled “Effectiveness of Merger Remedies: The Case of Chilean Gasoline Retail Markets,” I empirically assess the impact of a merger between two large retailers in the Chilean gasoline retail market and evaluate the effectiveness of gas stations divestitures as post-merger remedies. Results suggest a modest but significant effect of the merger on prices, and show that in certain cases the divestitures were indeed effective in mitigating this anticompetitive effect.
