Divesting brands in mergers can curb market power, boost social welfare.
The article explores how mergers in a competitive market can affect social welfare. By looking at a specific type of merger with efficiency gains and structural remedies, the researchers found that divesting certain brands to a competitor can help reduce the merged entity's market power. This means that mergers with remedies can lead to more beneficial mergers overall, but if the efficiency gains are lower, more divestitures are needed to balance market power.