Do Merger Efficiencies Always Mitigate Price Increases?
Zhiqi Chen () and
Journal of Industrial Economics, 2018, vol. 66, issue 1, 95-125
In a Cournot model with differentiated products, we demonstrate that merger efficiencies in the form of lower marginal costs for the merging firms (the insiders) lead to higher postâ€ merger prices under certain conditions. Specifically, when the degree of substitutability between the two insiders is not too high relative to that between an insider and an outsider, increased efficiencies may exert upward rather than downward pressure on the prices of the merging firms. Our results suggest that in cases where firms engage in quantity competition, antitrust authorities should not presume that efficiencies will necessarily mitigate the anticompetitive effects of the merger.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Do Merger Efficiencies Always Mitigate Price Increases? (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:jindec:v:66:y:2018:i:1:p:95-125
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-1821
Access Statistics for this article
Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven
More articles in Journal of Industrial Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().