A note on mergers and relocation

Alexander Rasch

Journal of Economics, 2012, vol. 107, issue 3, 277-282

Abstract: Posada and Straume (J Econ 83:243–265, 2004 ) analyze a three-firm model of a circular city where two of the firms merge and may choose to relocate. They propose an equilibrium with relocation where taking part in the merger yields higher profits than staying outside, i.e., relocation may solve the so-called merger paradox. In this note, it is shown that the equilibrium candidate considered is not an equilibrium. Copyright Springer-Verlag 2012

Keywords: Circular city; Horizontal product differentiation; Merger; Relocation; D43; L13; L41; R30 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:107:y:2012:i:3:p:277-282

DOI: 10.1007/s00712-012-0269-5

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