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Mergers In Asymmetric Stackelberg Markets

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Author Info
Ramón Faulí-Oller () (Universidad de Alicante)
Marc Escrihuela () (Universidad de Alicante)
Abstract

It 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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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2007-14.pdf
File Format: application/pdf
File Function: Fisrt version / Primera version, 2007
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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2007-14.

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Length: 16 pages
Date of creation: May 2007
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2007-14

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Related research
Keywords: Mergers; Asymmetries; Stackelberg.;

Find related papers by JEL classification:
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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This page was last updated on 2009-12-11.

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