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Merger, Ease Of Entry And Entry Deterrence In A Dynamic Model

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  • ANTHONY M. MARINO
  • J�N Z�BOJN�K

Abstract

We analyze whether ease and speed of entry can mitigate the anti-competititve effects of a merger, in a dynamic model of endogenous merger. In our model, if new firms can enter quickly, it is more likely that merger is motivated by efficiency as opposed to increased market power. Thus, there is less reason to challenge the merger. On the other hand, if entry of new firms becomes less costly, firms may have a stronger incentive to monopolize the industry through horizontal merger. We also show that when the incumbent can engage in entry deterrence activities, anti-merger policy can decrease welfare. Copyright Blackwell Publishing Ltd. 2006.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Journal of Industrial Economics.

Volume (Year): 54 (2006)
Issue (Month): 3 (09)
Pages: 397-423

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Handle: RePEc:bla:jindec:v:54:y:2006:i:3:p:397-423

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Mason, Robin & Weeds, Helen, 2013. "Merger policy, entry, and entrepreneurship," European Economic Review, Elsevier, vol. 57(C), pages 23-38.
  2. Ramón Faulí-Oller & Joel Sandonís, 2007. "Downstream Mergers And Entry," Working Papers. Serie AD, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) 2007-21, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. Ray Chaudhuri, A., 2008. "A Dynamic Model of Endogenous Mergers and Trade Liberalization," Discussion Paper, Tilburg University, Center for Economic Research 2008-22, Tilburg University, Center for Economic Research.
  4. Patrice Bougette & Kai Hüschelrath & Kathrin Müller, 2014. "Do horizontal mergers induce entry? Evidence from the US airline industry," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 21(1), pages 31-34, January.

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