Horizontal Mergers: An Equilibrium Analysis

Joseph Farrell () and Carl Shapiro

American Economic Review, 1990, vol. 80, issue 1, 107-26

Abstract: The authors analyze horizontal mergers in Cournot oligopoly. They find general conditions under which such mergers raise price, and show that any merger not creating synergies raises price. The authors develop a procedure for analyzing the effect of a merger on rivals and consumers and, thus, provide sufficient conditions for profitable mergers to raise welfare. They show that traditional merger analysis can be misleading in its use of the Herfindahl Index. Their analysis stresses the output responses of large firms not participating in the merger. Copyright 1990 by American Economic Association.

Date: 1990
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Related works:
Working Paper: Horizontal Mergers: An Equilibrium Analysis (1988)
Working Paper: HORIZONTAL MERGERS: AN EQUILIBRIUM ANALYSIS (1988)
Working Paper: Horizontal Mergers: An Equilibrium Analysis (1988)
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