For a telecommunications merger, CRA economists developed a game theory model to address potential coordinated effects concerns by US antitrust authorities. In each local market, the model identified the “maverick” (i.e., the firm with the strongest incentive to cheat and undercut the monopoly price) and the “most forgiving firm” (i.e., the firm with the weakest incentive to punish cheaters). The model also showed that the merger would not change the incentives of these firms in any significant way and thus would not significantly increase the risk of coordination.
CRA Competition's response to EU Draft Merger Guidelines: An economic perspective on the emerging framework
Our European Competition team has contributed to the economic assessment in nearly a third of distinct merger decisions cited in the draft, (46 out of 164)...