MERGERS WITH SUPPLY FUNCTIONS

Uğur Akgün

Journal of Industrial Economics, 2004, vol. 52, issue 4, 535-546

Abstract: I analyze the equilibrium effects of a merger in an industry when firms compete by submitting supply functions. Under the assumptions that the industry capital stock is fixed and production costs are quadratic and decreasing in capital, I find that any merger results in all firms reducing supply. The decrease in supply by non‐participating firms makes any merger profitable. A merger from a symmetric industry lowers welfare.

Date: 2004
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