CRA Insights

Bidding Competition and the UPP Test

November 29, 2009

Farrell and Shapiro (2008) have proposed a test – called the Upward Pricing Pressure (UPP) test – to evaluate potential unilateral effects of horizontal mergers. This comment shows that the UPP test – suitably reinterpreted and properly implemented – can be applied usefully also in industries where suppliers set prices through bidding competition.

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