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Horizontal Mergers in Spatially Differentiated Noncooperative Markets

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  • McAfee, R Preston
  • Simons, Joseph J
  • Williams, Michael A

Abstract

The authors present a Cournot-Nash model of horizontal mergers between firms that engage in spatial price discrimination. The model extends the analysis of such mergers as presented in the U.S. Department of Justice's Merger Guidelines. Rather than conclude the evaluation of such a merger with an estimate of the postmerger Hirschman-Herfindahl Index, as is done in the Merger Guidelines, the authors' model yields an estimate of the increases in the equilibrium, postmerger delivered.prices caused by the merger. Copyright 1992 by Blackwell Publishing Ltd.

Suggested Citation

  • McAfee, R Preston & Simons, Joseph J & Williams, Michael A, 1992. "Horizontal Mergers in Spatially Differentiated Noncooperative Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 349-358, December.
    • Handle: RePEc:bla:jindec:v:40:y:1992:i:4:p:349-58
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    Citations

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    Cited by:

    1. Benchekroun, Hassan & Gaudet, Gérard, 2015. "On the effects of mergers on equilibrium outcomes in a common property renewable asset oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 209-223.
    2. Emilie Dargaud & Carlo Reggiani, 2015. "On The Price Effects Of Horizontal Mergers: A Theoretical Interpretation," Bulletin of Economic Research, Wiley Blackwell, vol. 67(3), pages 236-255, July.
    3. Cosnita-Langlais, Andreea, 2012. "Horizontal market concentration: Theoretical insights from spatial models," Research in Economics, Elsevier, vol. 66(1), pages 22-32.
    4. John Heywood & Zheng Wang, 2014. "Spatial price discrimination and mergers with convex production costs," Letters in Spatial and Resource Sciences, Springer, vol. 7(1), pages 1-8, March.
    5. Boone, Jan, 2002. "'Be Nice, Unless it Pays to Fight': A New Theory of Price Determination with Implications for Competition Policy," CEPR Discussion Papers 3342, C.E.P.R. Discussion Papers.
    6. Bertrand, Olivier & Zuniga, Pluvia, 2006. "R&D and M&A: Are cross-border M&A different? An investigation on OECD countries," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 401-423, March.
    7. Philippe Cyrenne, 1999. "On Antitrust Enforcement and the Deterrence of Collusive Behaviour," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(3), pages 257-272, May.
    8. Lommerud, Kjell Erik & Sorgard, Lars, 1997. "Merger and product range rivalry," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 21-42, November.
    9. Calem, Paul S. & Dor, Avi & Rizzo, John A., 1999. "The welfare effects of mergers in the hospital industry," Journal of Economics and Business, Elsevier, vol. 51(3), pages 197-213, May.
    10. Rothschild, R. & Heywood, John S. & Monaco, Kristen, 2000. "Spatial price discrimination and the merger paradox," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 491-506, September.
    11. David Soberman, 2022. "Business Expansion Through Acquisition," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 9(3), pages 74-94, December.
    12. George Norman & Lynne Pepall, 1998. "Mergers in a Cournot Model of Spatial Competition: Urban Sprawl and Product Specialization," Discussion Papers Series, Department of Economics, Tufts University 9813, Department of Economics, Tufts University.
    13. Kenneth Hendricks & R. Preston Mcafee, 2010. "A Theory Of Bilateral Oligopoly," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 391-414, April.
    14. Bertrand, Olivier, 2009. "Effects of foreign acquisitions on R&D activity: Evidence from firm-level data for France," Research Policy, Elsevier, vol. 38(6), pages 1021-1031, July.
    15. Boone, Jan, 2006. "Firms Merge in Response to Constraints," CEPR Discussion Papers 5744, C.E.P.R. Discussion Papers.
    16. George Norman & Lynne Pepall, 1998. "Horizontal Mergers in Spatially Differentiated NonCooperative Markets: a Comment," Discussion Papers Series, Department of Economics, Tufts University 9804, Department of Economics, Tufts University.
    17. Zhiqi Chen & Gang Li, 2018. "Horizontal Mergers In The Presence Of Capacity Constraints," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1346-1356, April.
    18. John Heywood & Guangliang Ye, 2013. "Sequential entry and merger in spatial price discrimination," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 841-859, June.
    19. George Norman & Lynne Pepall, 2000. "Profitable Mergers in a Cournot Model of Spatial Competition," Southern Economic Journal, John Wiley & Sons, vol. 66(3), pages 667-681, January.
    20. R. Rothschild, 2000. "Merger under Spatial Competition," Urban Studies, Urban Studies Journal Limited, vol. 37(3), pages 443-449, March.
    21. George Norman & Lynne Pepall, 2000. "Spatial Competition and Location with Mergers and Product Licensing," Urban Studies, Urban Studies Journal Limited, vol. 37(3), pages 451-470, March.
    22. Jonas Häckner, 2001. "Market Delineation and Product Differentiation," Journal of Industry, Competition and Trade, Springer, vol. 1(1), pages 81-99, March.
    23. John C. Navin & Timothy S. Sullivan, 2007. "Do Riverboat Casinos Act as Competitors? A Look at the St. Louis Market," Economic Development Quarterly, , vol. 21(1), pages 49-59, February.
    24. Huang, Kun & Stiegert, Kyle W., 2010. "Evaluating a Supermarket Merger Event: The Case of Copps and Kohl's in Madison WI," Working Papers 201441, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.

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