Unilateral Effects with Endogenous Quality

Brijesh P. Pinto () and David S. Sibley ()
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Brijesh P. Pinto: World Bank Group
David S. Sibley: University of Texas at Austin

Review of Industrial Organization, 2016, vol. 49, issue 3, No 3, 449-464

Abstract: Abstract Formal merger analysis typically ignores the possibility that both prices and quality levels may be endogenous. This paper extends the traditional analysis of mergers to include both quality and price effects. Based on simulations, we find that mergers can either raise or lower the quality levels of the merging firms; non-merging firms always raise their quality levels. We find that while the standard upward pricing pressure index is a good predictor of the qualitative results of merger simulations, the equivalent index for quality performs poorly.

Keywords: Antitrust; Congestion; Mergers (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11151-016-9504-5

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