ANTITRUST VERSUS INDUSTRIAL POLICIES, ENTRY AND WELFARE

Guy Meunier (1) , Jean-Pierre Ponssard (2, 1) , Francisco Ruiz-Alizeda (1)

1 X-DEP-ECO - Département d'Économie de l'École Polytechnique
2 CNRS - Centre National de la Recherche Scientifique

In industries with large sunk costs, the investment strategy of competing firms depends on the regulatory context. We consider ex-ante industrial policies in which the sunk cost may be either taxed or subsidized, and antitrust policies which could be either pro-competitive (leading to divestiture in case of high ex-post protability) or lenient (allowing mergers in case of low ex-post protability). Through a simple entry game we completely characterize the impact of these policies and examine their associated dynamic trade-offs between the timing of the investment, the ex-post benefits for the consumers, and the possible duplication of fixed costs. We find that merger policies are dominated by ex-ante industrial policies, whereas the latter are dominated by divestiture policies only under very special circumstances.

Mots clés: entry; industry dynamic; antitrust policy; divestiture

Domaines: Gestion et management; Economies et finances

Guy Meunier, Jean-Pierre Ponssard, Francisco Ruiz-Alizeda. ANTITRUST VERSUS INDUSTRIAL POLICIES, ENTRY AND WELFARE. 2015. ⟨hal-01117091⟩