The effect of horizontal mergers, when firms compete in prices and investments

Massimo Motta () and Emanuele Tarantino

International Journal of Industrial Organization, 2021, vol. 78, issue C

Abstract: Motivated by a number of high-profile antitrust cases, we study mergers when firms offer differentiated products and compete in prices and investments. Since the net effect of the merger is a priori ambiguous, we use aggregative game theory to sign it: we find that absent efficiency gains, the merger always reduces total investments and consumer surplus. We also prove that there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments.

Keywords: Horizontal mergers; Innovation; Investments; Competition (search for similar items in EconPapers)
JEL-codes: D43 K22 L13 L41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Related works:
Working Paper: The Effect of Horizontal Mergers, When Firms compete in Prices and Investments (2018)
Working Paper: The Effect of Horizontal Mergers, when Firms Compete in Prices and Investments (2017)
Working Paper: The effect of horizontal mergers, when firms compete in prices and investments (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:78:y:2021:i:c:s0167718721000679

DOI: 10.1016/j.ijindorg.2021.102774

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