Mergers in asymmetric Stackelberg markets
AbstractIt is well known that the profitability of horizontal mergers with quantity competition is scarce. However, in an asymmetric Stackelberg market we obtain that some mergers are profitable. Our main result is that mergers among followers become profitable when the followers are inefficient enough. In this case, leaders reduce their output when followers merge and this reduction renders the merger profitable. This merger increases price and welfare is reduced.
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Bibliographic InfoArticle provided by Springer in its journal Spanish Economic Review.
Volume (Year): 10 (2008)
Issue (Month): 4 (December)
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Other versions of this item:
- Marc Escrihuela Villar & Ramon Fauli Oller, 2007. "Mergers in Asymmetric Stackelberg Markets," Department of Economics and Finance Working Papers EC200701, Universidad de Guanajuato, Department of Economics and Finance.
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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