On the social welfare effects of runner-up mergers in concentrated markets

Dragan Jovanovic (), Christian Wey and Mengxi Zhang ()
Additional contact information
Dragan Jovanovic: Deutsche Telekom AG
Mengxi Zhang: Heinrich-Heine University Düsseldorf

Economics Bulletin, 2021, vol. 41, issue 4, 2330-2337

Abstract: This paper argues that it cannot be taken for granted that any merger that raises consumer surplus also increases social welfare. We assume a Cournot model with homogeneous goods, linear demand, and constant marginal costs, to show that a merger can raise consumer surplus while harming social welfare. Within this framework, we show that such an outcome depends on two conditions: the merger is between relatively small firms and it reduces concentration; that is, a constellation which can be characterized as a “runner-up†merger.

Keywords: Runner-up mergers; market shares; merger efficiencies; oligopoly; consumer and social welfare standard (search for similar items in EconPapers)
JEL-codes: L1 L4 (search for similar items in EconPapers)
Date: 2021-12-29
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I4-P201.pdf (application/pdf)

Related works:
Working Paper: On the social welfare effects of runner-up mergers in concentrated markets (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-21-00801

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().