Mergers, antitrust, and competition

In the dissertation I analyze various aspects of competition policy using a game-theory approach. The dissertation is organized into three essays.; The first paper is "Structural Remedies in Merger Regulation in a Cournot Framework". Structural remedies modify the allocation of property rights and create new firms through partial divesture of assets, and they are viewed as a main instrument to restore effective competition in relevant markets. In the paper, I introduce a theoretical model of structural remedies in merger regulation in a Cournot framework with fixed capital (assets). The model presented in this paper captures all the main issues that are at stake in merger approval decisions: efficiency defense, consumer welfare, amount of divesture, and the viability of a new entrant. The implications of the work provide a rationale for antitrust agency decisions, for example, to exclude existing competitors (incumbents) from bidding for divested assets.; The second paper "Efficiency Defense and Administrative Fuzziness in Merger Regulation" studies an asymmetric information problem between the antitrust agency and merging firms concerning efficiencies due to mergers. In the paper, the agency uses mixed strategies in accepting efficiency defense arguments after observing certain signals as a tool to (partially) separate different merger types by changing approval probabilities and, consequently, firms' expected payoffs from a merger. The separation leads to a lower value of the expected mistake by the agency. The paper provides new insights on the value of commitment to certain policies that are available to antitrust agencies. If the agency can commit to act not sequentially rational in some decision nodes, then it can lower the value of the expected mistake.; In the paper "Competition and Performance in the Manufacturing Sector in the Czech Republic" (joint with Alena Zemplinerova) we investigate the influence of domestic and import competition on performance of manufacturing industries in the Czech Republic. Using panel data, we found (i) a significant increasing non-linear relationship between performance of manufacturing industries and competition measured by the Herfindahl-Hirschman Index; (ii) import competition measured as import penetration ratio is negatively correlated with performance of Czech industries; and (iii) foreign direct investments are positively correlated with the performance.