Whom Should I Merge With? How product substitutability affects merger profitability

Roberto Cellini

MPRA Paper from University Library of Munich, Germany

Abstract: The paper presents a simple model of oligopoly, in which three firms supply differentiated products. The degree of product substitutability is not uniform across goods. We investigate the merger profitability, and we show that profitability depends on the degree of good differentiation. Contrary to what seems to emerge from different models, we find that merger between firms that supply “more similar” product is more profitable as compared to merger between firms supplying more differentiated goods.

Keywords: oligopoly; merger; profitability; merger paradox (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2020-06, Revised 2020-08
New Economics Papers: this item is included in nep-bec, nep-com, nep-mic and nep-ore
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Journal Article: Whom should I merge with? How product substitutability affects merger profitability (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:102416

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