Mergers of Complements: On the Absence of Consumer Benefits

Alessandro S. Kadner-Graziano

International Journal of Industrial Organization, 2023, vol. 89, issue C

Abstract: Mergers of complements are widely thought to decrease prices and thereby benefit consumers. Benefits materialise when the merging parties are monopolists but not when they face perfect competition. What about all cases between those competitive extremes? I model a vertically related industry where every supplier may face competition. I show that, for general demand functions, pre-merger margins can reveal whether a merger would decrease prices. Then I develop a simple, practicable merger test and identify when the standard prediction of merger benefits is inconsistent with observable facts. Instead of yielding benefits, profitable mergers of complements can cause unambiguous consumer harm.

Keywords: Mergers; Complements; Antitrust; Margins; Consumer benefits (search for similar items in EconPapers)
JEL-codes: D4 L1 L4 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:89:y:2023:i:c:s0167718723000176

DOI: 10.1016/j.ijindorg.2023.102935

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