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Market integration and market concentration in horizontally differentiated industries

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  • Eckel, Carsten

Abstract

This paper derives the impact of market integration on equilibrium firm size and market concentration in horizontally differentiated industries. We show that market concentration (measured by the number of firms) can rise as a consequence of market integration if firms engage in RDcompetition. We also demonstrate that whether concentration occurs or not depends on the RDproduction function and on consumer preferences. This result implies that the welfare effects of market integration are not unambiguously positive.

Suggested Citation

  • Eckel, Carsten, 2005. "Market integration and market concentration in horizontally differentiated industries," Munich Reprints in Economics 20536, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20536
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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