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Horizontal Mergers in the Spokes Model

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  • Emilie Dargaud
  • Carlo Reggiani

Abstract

The theoretical analysis of merger poses a number of paradoxes. If firms compete in prices, a merger is profitable for all parties involved. Outsiders, however, free-ride and earn higher profits than insiders. The "spokes model" is a recently introduced framework to study n-firms spatial competition. This paper shows that in this model free-riding does not necessarily take place.

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Paper provided by Department of Economics, University of York in its series Discussion Papers with number 09/12.

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Handle: RePEc:yor:yorken:09/12

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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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Keywords: horizontal mergers; spokes model; mergers paradoxes.;

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