Unveiling Bargaining Impacts of Mergers and Divestitures (April, 2024) 

Finalist LEAR Young Talent Competition Award (2022), previously presented as "How Divestitures Affect Bargaining Power".

Merger and divestiture policies influences bargaining power in vertical relationships, a commonly underestimated factor. I present a novel empirical framework that leverages easily accessible sales data to calculate bounds on upstream bargaining weights among manufacturers and retailers at the brand level. With this approach, I examine the impact of changes in bargaining weights under varying scenarios. Specifically, I analyze a landmark U.S. merger, approved conditional on divestiture, and its effect on bargaining power, final prices, and consumer surplus. Compared to a no-merger scenario, I estimate an increase in bargaining power associated with divested brands and a decrease related to the brands of the merged entity. This shift contributes to an overall rise in consumer surplus. Furthermore, I simulate consumer surplus outcomes under alternative divestiture packages, revealing an alternative package with fewer divested brands that could have improved consumer welfare. These findings add a novel angle to the recent discussions about the fact that antitrust authorities may have been too lax in the past decades.

Presented at: LEAR competition festival (2022), UC Berkeley (2023), DIW Berlin (2023), Jornadas de Economia Industrial Bilbao (2023), LUISS University (2024), MACCI Annual Conference (2024), IIOC Boston (2024) and EAYE Paris (2024).

Upstream Mergers with Divestitures in Vertical Markets (with M. Guignard) [New version coming soon]

EUI Second Year Paper Prize (2021)

This paper analyses a large upstream joint venture with divestiture in the French coffee market. Contrary to previous approaches used to study the effect of upstream divestiture on prices and economic welfare, we model the vertical market structure. First, we show that divestiture can lead to marginal cost savings for the buyer of the divested brand. Second, our results reveal that, accounting for upstream bargaining, the standard policy recommendation corresponding to request divestiture to small recipient firms might not hold.

Presented at: CEPR-JIE Applied IO School (2022), European University Institute (2022), CRESSE conference (2021), CCP-CLEEN conference (2021) and Jornadas de Economia Industrial (2021).

The Role of Conduct in Divestitures

This paper investigates how divestiture affects prices and welfare in a model of firm conduct. I use a large divestiture in the U.S. beer market as case study. First, I find that price coordination materialized through conduct parameters is a countervailing force limiting the pro-competitive effects of a divestiture. Given current estimates, price coordination eliminates about 66% to 88% of the welfare benefits caused by a divestiture. Second, based on counterfactual simulations, I show that a merger cleared with divestiture is likely to deteriorate consumer surplus more than a merger approved without divestiture. Third, antitrust authorities need to take into account diversion ratios for products of the buyer of the divested brand and the potential coordinating partners when assessing the suitability of the buyer of the divested brand.

Presented at: CRESSE  conference (2022) and CLEEN conference (2022).

Work-in-progress

Artificial Intelligence and Competition (with V. Bramante, E. Calvano and G. Calzolari)

The Evolution of Bargaining Power (with M. Guignard)

Other Publications

Effectiveness of Horizontal Merger Remedies in Vertical Markets (with M. Guignard), March 2024, Concurrences N° 1-2024, Art. N° 116766, pp. 32-37