| Competition and monopoly have always been an eternal topic for industrial economics. Competition policy and regulation are one of the most exciting areas in economic policies. As industrial economics develops, many anticompetitive behaviors threatening and harming competition in markets are discovered. It becomes one of important tasks for antitrust agencies to maintain effective competition.Before the emergence of the unilateral effects theory, traditional method to define a relevant market has been used by antitrust agencies in investigating a variety of behaviors restricting competition and merger reviews. Since this method exposed many defects in practice, industrial economists and antitrust agencies began to realize that besides improving this method, it is necessary to look for a new way to evaluate anticompetitive effects without defining a relevant market.Since 1980s, the emergence of the unilateral effects theory has challenged the traditional market definition. According to the unilateral effects theory, generally, if it proves that the mergered firm can increase its price above the level before the merger, without a significant loss of customers, and then it can hold that the merger gives rise to unilateral anticompetitive effects, without evaluating the merger step by step by using the traditional method to define a revelant market. Thus, the emergence of unilateral effects theory and its application in antitrust policy greatly facilitate the merger reviews for antitrust agencies, and are popular with antitrust agencies.Theoretical study about unilateral effects can be divided into two branches:the first is based on oligopoly theories in product markets, and the second is based on probability theories in auction markets. The majority concerned the former, with a few paid attention to the latter. In product markets, the unilateral effects theories are based on oligopoly theories: the Cournot and the Bertrand models. In auction markets, modelling mainly is consided to make analysis of mergers and competitive effects in different forms of auctions with a variety of distribution functions in probability theories.As the most simply one of oligopoly models, Cournot model, it assumes that firms compete with each other with homogeneous products. This assumption is a little impractical. Therefore, the Cournot model is ignored in the initial modelling. This thesis briefly evaluates the related issues about the Cournot model and its applicability in the unilateral effects analysis. As the first choice in differentiated product markets, compared to the Cournot model, the Bertrand model is more close to the reality. However, many problems still exist in current studies, for example, the assumption of a single product firm, new entrant and repositioning etc.This thesis makes further research about the Bertrand model in differentiated product markets. Firstly, it builds the Bertrand model in the differentiated product markets, and deduces the possibility and size of the unilateral effects in the most simplified case. During the process of derivation, it finds that the size of the unilateral effects and the shape of the demand curve has a significant relationship. Therefore, it makes the size of unilateral effects with different sharps of the demand curves, including linear demand, isoelasticity of demand, choice models and Logit demand models. The result shows that the more the demand curve bends, the greater the predicted unilateral effects are.The first extension is to consider the case of multi-product merger. To reduce the complexity of the model, but also a more general conclusions can be drawn. Here it considers three-product merger:one firm produces two products and others produces only one. The result shows that this kind of merger can still give rise to unilateral effects, and the manifestation is different produsts rise to different levels. The magnitudes depend on the substitutability among products. That is, the greater the substitutability is, the bigger the diversion ratio is, and the greater the possibility and the magnitude is, when the price of a product increase.The second extension is to consider the repositioning strategy in the postmerger market. In the postmerger market, all the firms, including merging firms and non-merging firms, have incentive for product repositioning following a merger. However, the result shows that the repositioning of the merged firm is more beneficial. In order to prevent compete against with each other in the same market, the merged firm usually chooses to reposition their products, and even to develop a new market. The market will be in some kind of vacance in competition, and new enters will fill in, which will reduce or offset the unilateral effects and consumer welfare can be improved. The third extension is to build a four-stage dynamic game model to consider how new enters affect the unilateral effects. By relaxing the assumption that the number of firms in the market is fixed, the result show that: when new firms can enter into the market freely, the merger is unprofitable if no sufficient synergies give rise to.In auction, bidding and bargaining markets, horizontal mergers can still give rise to unilateral effects. A few cases are chosed to discuss in those markets and an initial study about unilateral effects in common value is made. Cause there is something similar with the pricing under Bertrand model in differentiated products markets and the bidding under auction model in auction markets, so the conclusions in differentiated products markets can be applied to the auction and bidding markets. The result proves this anticipation. Especially, by introducing the concept of "winning probability diversion ratio", the UPP test, which is an approach to identifying unilateral effects in differentiated products markets, also can be in auction and bidding markets.When it refers to the bargaining market, in the form of a case study, an analysis is made in this case:the products or services are insepareable, and the merged firm can use the "all-or-nothing" stragy to increase its bargaining power. Thus horizontal merger also gives rise to unilateral effects.This thesis also reviews and classifies the methods or models using to identify or evaluate the unilateral effects, and discuss some problems when using those methods or models. A few classical cases are also studied. Besides, with GUPPI (Gross upward price pressure index), an empirical analysis of the merger between Oralce and PeopleSoft is made and the result shows that this merger causes unilateral effects, as the same as the one antitrust agencies in the US and the EU. As a fast and effective preliminary screening tool, GUPPI can be in merger reviews. It proposes the antitrust agency in China can use this kind of methods or index in merger reviews.At last it comes the main conclusions of this whole thesis, and a prospect for future research is also made. |
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