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ENTRY DETERRENCE BY NON-HORIZONTAL MERGER -super-

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  • ROBERT INNES

Abstract

We study when and how pure non-horizontal mergers, whether cross-product or vertical, can deter new entry. Organizational mergers implicitly commit firms to more aggressive price competition. Because heightened competition deters entry, mergers can occur in equilibrium even when, absent entry considerations, they do not. We show that, in order to prevent a flood of entrants, mergers arise even when a marginal merger costs incumbent firms more than does a marginal entrant. Copyright Blackwell Publishing Ltd. 2006.

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  • Robert Innes, 2006. "ENTRY DETERRENCE BY NON-HORIZONTAL MERGER -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 54(3), pages 369-395, September.
  • Handle: RePEc:bla:jindec:v:54:y:2006:i:3:p:369-395
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    Cited by:

    1. Brandão, António & Correia-da-Silva, João & Pinho, Joana, 2014. "Spatial competition between shopping centers," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 234-250.
    2. Foros, Øystein & Kind, Hans Jarle & Shaffer, Greg, 2011. "Resale price maintenance and restrictions on dominant firm and industry-wide adoption," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 179-186, March.

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