Towards an effective merger control policy in a dynamic context
Abstract
This article shows that dynamic efficiency gains should be better considered in merger control policy, especially in innovative sectors where they are very high and play an essential role. Neglecting those effects leads to serious mistakes in merger assessment (type-1 errors) 1 to the detriment of the industry and consumers alike. Starting from the Cournot model with homogeneous product and adding investment in marginal cost reduction, we show that mergers increase firms' investment and reduce marginal costs. These dynamic efficiency gains add to any static efficiency gains like synergy and economies of scale. If the total efficiency gains are large enough, they can lower prices and benefit consumers. Technical progress increases the dynamic effects and makes mergers much more likely to be pro-competitive.
Fields of Study & Subjects
Corporate Governance and Law
Corporate Finance and Governance
Merger and Competition Analysis
Publication details
- Journal / source
- European Competition Journal
- Publisher
- Informa UK Limited
- Volume
- 22
- Issue
- 2
- Pages
- 456–470
- Publication date
- 15 April 2026
- Language
- EN