Mergers in symmetric and asymmetric noncooperative auction markets: the effects on prices and efficiency

United States antitrust merger analysis has recently focused on simulating the unilateral effects of mergers. We develop a model to simulate the unila teral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S., and calibrate our s imulations to known market parameters. We compare the price increases in our model to those suggested by analytica lly simpler models. The simulation results suggest that the unilateral pric e increases predicted by our model are modest in general. We also simulate the merger cost savings that are needed to offset the price effects. (C) 20 00 Elsevier Science B.V. All rights reserved.