Welfare Enhancing Mergers under Product Differentiation

Flavio Menezes and Tina Kao

No 350, Discussion Papers Series from University of Queensland, School of Economics

Abstract: We follow the duopoly framework with differentiated products as in Singh and Vives (1984) and Zanchettin (2006) and examine the welfare effects of a merger between two asymmetric firms. We find that for quantity competition, the merger increases total welfare if the cost asymmetry falls into a specific range. Furthermore, this parameter range widens if the products are closer substitutes. On the other hand, mergers are never welfare enhancing in this setting when firms compete in prices.

Date: 2007
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
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https://economics.uq.edu.au//files/44472/350.pdf (application/pdf)

Related works:
Journal Article: WELFARE‐ENHANCING MERGERS UNDER PRODUCT DIFFERENTIATION (2010)
Working Paper: Welfare Enhancing Mergers Under Product Differentiation (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:350

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