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Analysis of Merger Control in A Network Products Market

Tsuyoshi Toshimitsu

No 169, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Using a horizontally differentiated three-firm model, we consider horizontal merger and antitrust policy in a network products market, where we observe network externalities and compatibilities (interconnectivities) between products and services. In particular, if the degree of network compatibilities in the case of a merger is sufficiently larger than that of product substitutability, consumer surplus is larger than in the premerger case. Thus, the proposed merger is allowed by antitrust authorities based on the positive effect on consumer surplus. In this case, the merger is Pareto improving.

Keywords: horizontal merger; antitrust policy; network externality; compatibility; consumer surplus standard; horizontally differentiated Cournot competition (search for similar items in EconPapers)
JEL-codes: D43 K21 L12 L15 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ind, nep-law and nep-mic
Date: 2017-11, Revised 2017-11
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http://192.218.163.163/RePEc/pdf/kgdp169.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:169

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