How Anti-merger Laws Can Reduce Investment, Help Producers, and Hurt Consumers

Konstantine Gatsios and Larry Karp

Journal of Industrial Economics, 1992, vol. 40, issue 3, 339-48

Abstract: If capital lowers marginal cost and a firm with more capital gets a bigger share of the surplus in merger bargaining, then the equilibrium price with a merger may be lower than without a merger. If entry is restricted, the level of industry profits minus investment costs may be higher if mergers are prohibited. Thus, a regulatory climate that permits mergers may harm firms and benefit consumers. Copyright 1992 by Blackwell Publishing Ltd.

Date: 1992
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