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Profitability of Horizontal Mergers in the Presence of Price Stickiness

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Abstract

In this paper, we investigate the profitability of horizontal mergers of firms with price adjustments. We take a di erential game approach and both the open-loop as well as the closed-loop equlibria are considered. We show that the merger incentive is determined by how fast the price adapts to the equilibrium level.

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  • H. Esfahani, 2011. "Profitability of Horizontal Mergers in the Presence of Price Stickiness," Working Papers wp747, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp747
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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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