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

Volker Nocke and Nicolas Schutz

RAND Journal of Economics, 2025, vol. 56, issue 3, 233-250

Abstract: Using an aggregative games approach, we analyze horizontal mergers in a model of multiproduct‐firm price competition with CES and logit demand, allowing for arbitrary firm and product heterogeneity. We provide conditions under which a merger raises consumer surplus, and establish the dynamic optimality of a myopic, consumer‐surplus‐based merger approval policy. We also study the aggregate surplus and external effects of a merger. Finally, we show that the market power effect of a merger, defined as the welfare effect in the absence of merger‐specific synergies, can be approximated by the induced, naively computed change in the Herfindahl index.

Date: 2025
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https://doi.org/10.1111/1756-2171.12500

Related works:
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)
Working Paper: An Aggregative Games Approach to Merger Analysis in Multiproduct-Firm Oligopoly (2018)
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