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Analyzing Mergers Using Capacity Closures

Nicholas Hill, EAG 08-08, August 2008
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In this paper I describe a method for analyzing mergers in industries in which it is more cost effective to close capacity than to idle it. The method can be used to define markets, to assess the likelihood of competitive effects and to evaluate divestitures. I also discuss the method’s data requirements and how it can be modified to deal with the types of issues that often arise during an antitrust investigation.

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