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POST-MERGER PRODUCT REPOSITIONING -super-*

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  • AMIT GANDHI
  • LUKE FROEB
  • STEVEN TSCHANTZ
  • GREGORY J. WERDEN

Abstract

This paper analyzes the effects of mergers between firms competing by simultaneously choosing price and location. Products combined by a merger are repositioned away from each other to reduce cannibalization, and non-merging substitutes are, in response, repositioned between the merged products. This repositioning greatly reduces the merged firm's incentive to raise prices and thus substantially mitigates the anticompetitive effects of the merger. Computation of, and selection among, equilibria is done with a novel technique known as the stochastic response dynamic , which does not require the computation of first-order conditions. Copyright 2008 The Authors.

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Bibliographic Info

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

Volume (Year): 56 (2008)
Issue (Month): 1 (03)
Pages: 49-67

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Handle: RePEc:bla:jindec:v:56:y:2008:i:1:p:49-67

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Cited by:
  1. Draganska, Michaela & Seim, Katja & Mazzeo, Michael, 2007. "Beyond Plain Vanilla: Modeling Joint Product Assortment and Pricing Decisions," Research Papers 1982, Stanford University, Graduate School of Business.
  2. Andrew Sweeting, 2007. "Dynamic Product Repositioning in Differentiated Product Markets: The Case of Format Switching in the Commercial Radio Industry," NBER Working Papers 13522, National Bureau of Economic Research, Inc.
  3. repec:ebl:ecbull:v:30:y:2010:i:1:p:94-102 is not listed on IDEAS

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