On the merger paradox and asymmetric product differentiation

Tsuyoshi Toshimitsu and Tetsuya Nakajima ()

No 173, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Assuming asymmetric product differentiation, we reconsider the merger paradox in the cases of quantity-setting and price-setting games. We investigate whether emergence of the merger paradox depends on the degree of product differentiation of the outsider, irrespective of the mode of competition. In particular, being different from the result of Deneckere and Davidson (1985), we show that the merger paradox arises in the case of price-setting games if the degree of product differentiation of the outsider is sufficiently small.

Keywords: merger paradox; quantity-setting game, price-setting game, asymmetric product differentiation (search for similar items in EconPapers)
JEL-codes: D43 L12 L13 L41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2018-02, Revised 2018-02
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ind, nep-mic, nep-mkt and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:173

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