Small Fish Become Big Fish: Mergers in Stackelberg Markets Revisited

Duarte Brito and Margarida Catalão-Lopes

The B.E. Journal of Economic Analysis & Policy, 2011, vol. 11, issue 1, 20

Abstract: This paper analyzes, under convex costs, the price effects of mergers involving two Stackelberg followers that together become a leader and revisits the “merger paradox” and the insiders' dilemma. Contrary to what might be expected, prices are more likely to increase with cost convexity than with linear costs. Also, the incentive to free-ride may reappear.

Keywords: mergers; Stackelberg; convex costs (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (16)

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DOI: 10.2202/1935-1682.2817

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