Mergers in Asymmetric Stackelberg Markets

Marc Escrihuela Villar () and Ramon Fauli Oller
Additional contact information
Marc Escrihuela Villar: Department of Economics and Finance, Universidad de Guanajuato
Ramon Fauli Oller: Department of Economic Analysis, University of Alicante
Authors registered in the RePEc Author Service: Marc Escrihuela-Villar ()

No EC200701, Department of Economics and Finance Working Papers from Universidad de Guanajuato, Department of Economics and Finance

Abstract: It is well known that the profitability of horizontal mergers with quantity competition is scarce. However, in an asymmetric Stackelberg market we obtain that some mergers are profitable. Our main result is that mergers among followers become profitable when the followers are inefficient enough. In this case, leaders reduce their output when followers merge and this reduction renders the merger profitable. This merger increases price and welfare is reduced.

Keywords: Mergers; Asymmetries; Stackelberg (search for similar items in EconPapers)
JEL-codes: L13 L40 L41 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2007-02
New Economics Papers: this item is included in nep-bec, nep-com, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Mergers in asymmetric Stackelberg markets (2008)
Working Paper: MERGERS IN ASYMMETRIC STACKELBERG MARKETS (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:gua:wpaper:ec200701

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