Multiproduct mergers and quality competition

Justin Pappas Johnson and Andrew Rhodes ()

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Abstract: We investigate mergers in markets where quality differences between products are central and firms may reposition their product lines by adding or removing products of different qualities following a merger. Such mergers are materially different from those studied in the existing literature. Mergers without synergies may exhibit a product-mix effect which raises consumer surplus, but only when the pre-merger industry structure satisfies certain observable features. Post-merger synergies may lower consumer surplus. The level of, and changes in, the Herfindahl–Hirschman Index may give a misleading assessment of how a merger affects consumers. A merger may benefit some outsiders but harm others.

Date: 2021-09
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Citations: View citations in EconPapers (10)

Published in RAND Journal of Economics, 2021, 52 (3), pp.633-661. ⟨10.1111/1756-2171.12386⟩

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Journal Article: Multiproduct mergers and quality competition (2021)
Working Paper: Multiproduct Mergers and Quality Competition (2021)
Working Paper: Multiproduct Mergers and Quality Competition (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03356744

DOI: 10.1111/1756-2171.12386

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