An Aggregative Games Approach to Merger Analysis in Multiproduct-Firm Oligopoly

Volker Nocke and Nicolas Schutz

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: Using an aggregative games approach, we analyze horizontal mergers in a model of multiproduct-firm price competition with nested CES or nested logit demands. We show that the Herfindahl index provides an adequate measure of the welfare distortions introduced by market power, and that the induced change in the naively-computed Herfindahl index is a good approximation for the market power effect of a merger. We also provide conditions under which a merger raises consumer surplus, and conditions under which a myopic, consumer-surplus-based merger approval policy is dynamically optimal. Finally, we study the aggregate surplus and external effects of a merger.

Pages: 68
Date: 2018-06
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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Citations: View citations in EconPapers (22)

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Working Paper: An Aggregative Games Approach to Merger Analysis in Multiproduct-Firm Oligopoly (2018)
Working Paper: An Aggregative Games Approach to Merger Analysis in Multiproduct-Firm Oligopoly (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2018_024

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