The Competitive Effects of Mergers with Cournot Competition

Markus Reisinger and Hans Zenger

No 20649, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper provides a full characterization of the competitive effects of horizontal mergers in the Cournot model with heterogeneous firms and constant marginal costs. We show that price effects depend only on the smaller merging firm's market share and the number of firms but are independent of the distribution of market shares among other firms. Standard concentration measures, instead, are often misleading. We also provide simple---yet general---closed-form solutions for merger effects based on pre-merger parameters. Moreover, we extend the model to study the combination of output and input market power and relate our results to the Merger Guidelines.

Keywords: Cournot competition; Mergers; Demand curvature; Merger guidelines (search for similar items in EconPapers)
JEL-codes: D43 K21 L13 L41 (search for similar items in EconPapers)
Date: 2025-09
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