Efficiencies in the second-score auction model
Concurrences Review, May 2023
In markets in which sellers and buyers set individualized prices for products, the second-score auction (SSA) model is often used to analyze potential competitive effects of mergers between competing suppliers. While the SSA model often is used to identify adverse price effects in this space, it is used less frequently to analyze merger efficiencies, or changes in merging parties’ cost structure, that may improve consumer welfare.
In “Efficiencies in the second-score auction model,” published in Concurrences Review, Analysis Group Vice Presidents Maria Garibotti, Kristof Zetenyi, and Big Banternghansa address the questions raised by introducing merger efficiencies into the assessment of outcomes when employing the SSA model. The authors outline key considerations for antitrust practitioners; explore how efficiencies impact competition incentives; and describe how efficiencies can increase post-merger competition in some markets.