Upward Pricing Pressure

Analytics

Joseph Farrell and Carl Shapiro introduced the Unilateral Price Increase (UPP) as a method for evaluating mergers, serving as an alternative to share-based analysis. When the diversion ratio is estimated using shares, the UPP analysis integrates additional information by considering profit margins. In principle, the inclusion of more information should enhance the screening process. Although there is a cost associated with obtaining more information, profit margins are typically easily accessible.