Accurate merger control is crucial for consumer welfare and competitiveness. The US is currently undertaking a major revision of its merger control policy, which is expected to have a significant impact in corresponding EU policies. This Project’s primary objective is to advance the accuracy of merger control policies by showing that firms’ reactions to these policies in the form of non-price strategies have the potential to undo these policies’ benefits to consumers. As such, this Project is extremely timely for the EU. In particular, the Researcher will first model firms’ product differentiation strategies in response to a blocked or deterred merger, and he expects to show that firms that are prevented from merging strategically increase product differentiation to sustain higher prices. These higher prices would be an unintended consequence as merger control policy generally aims to block or deter mergers precisely to prevent higher prices for consumers. Modeling such unintended consequences is a novel and original contribution to the literature. To analyze this impact, multi-stage game theoretical models will be developed and solved for optimal merger enforcement. Then, the models will be extended to other non-price strategies. A second objective in this Project is to carry out an empirical research program in Public Policy topics paralleling over thirty master’s theses that the Researcher has supervised at Georgetown University’s Public Policy Institute. A selected topic, Mental Health and Macroeconomic Fluctuations, is detailed in the Proposal. This Project will allow the Researcher to transfer knowledge acquired at the University of Texas at Austin (Ph.D.) Georgetown University (teaching and research), and Law and Economics Consulting Group (LECG) (consulting and research) and to accomplish lasting cooperation with his US colleagues.
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