Upward pricing pressure under capacity constraints, kinked demand and other cases of a constrained pre-merger equilibrium

Bertram Neurohr

Economics Letters, 2016, vol. 139, issue C, 49-51

Abstract: Upward pricing pressure formulas for merger analysis (UPP and GUPPI) are adjusted for cases where pre-merger prices correspond to an equilibrium that is constrained in some way, and therefore do not satisfy regular pre-merger first-order conditions. This is the case in particular when pre-merger prices are higher as a result of capacity constraints or a kinked demand curve. The extent of the adjustment to the upward pricing pressure formulas is shown to be given simply by the extent to which pre-merger prices violate the Lerner condition.

Keywords: Horizontal mergers; Unilateral effects; Capacity constraints; Kinked demand; Upward pricing pressure (search for similar items in EconPapers)
JEL-codes: L4 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176515005376
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:139:y:2016:i:c:p:49-51

DOI: 10.1016/j.econlet.2015.12.020

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().