Experiments on horizontal mergers: Does size matter?

Steven Beckman, Gregory DeAngelo and W. James Smith

Economics Letters, 2012, vol. 117, issue 3, 537-539

Abstract: Current Department of Justice merger guidelines assume that merging the capacities of two firms will translate into an equivalent increase in market shares. Size matters. Economic theory asserts size is determined by marginal revenue and marginal cost not capacity. Size does not matter. In this paper we run horizontal merger experiments and find that the firms tend to share monopoly profits regardless of the size of the firms.

Keywords: Market share; Profits; Firm size; Mergers (search for similar items in EconPapers)
JEL-codes: K2 L1 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:117:y:2012:i:3:p:537-539

DOI: 10.1016/j.econlet.2012.07.016

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