Horizontal Mergers Without Synergies May Increase Consumer Welfare
AbstractMarkets with imperfect competition do not induce a cost-minimizing allocation of production between firms. The market's ability to rationalize production is even more limited if costs are private information to firms. Merger in such markets generate an efficiency gain associated with the pooling of information. Not only may costs be reduced, the price level and price variability may also decline and consumers may thus gain.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 558.
Length: 13 pages
Date of creation: 04 Jun 2001
Date of revision:
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Horizontal Merger; Welfare; Asymmetric Information;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-06-22 (All new papers)
- NEP-CFN-2001-06-22 (Corporate Finance)
- NEP-REG-2001-06-22 (Regulation)
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