Experiments on horizontal mergers: Does size matter?
AbstractCurrent Department of Justice merger guidelines assume that merging the capacities of two firms will translate into an equivalent increase in market shares. Size matters. Economic theory asserts size is determined by marginal revenue and marginal cost not capacity. Size does not matter. In this paper we run horizontal merger experiments and find that the firms tend to share monopoly profits regardless of the size of the firms.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 117 (2012)
Issue (Month): 3 ()
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Web page: http://www.elsevier.com/locate/ecolet
Market share; Profits; Firm size; Mergers;
Find related papers by JEL classification:
- K2 - Law and Economics - - Regulation and Business Law
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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