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Merger, Ease Of Entry And Entry Deterrence In A Dynamic Model

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  • ANTHONY M. MARINO
  • JÁN ZÁBOJNÍK

Abstract

We analyze whether ease and speed of entry can mitigate the anti-competititve effects of a merger, in a dynamic model of endogenous merger. In our model, if new firms can enter quickly, it is more likely that merger is motivated by efficiency as opposed to increased market power. Thus, there is less reason to challenge the merger. On the other hand, if entry of new firms becomes less costly, firms may have a stronger incentive to monopolize the industry through horizontal merger. We also show that when the incumbent can engage in entry deterrence activities, anti-merger policy can decrease welfare. Copyright Blackwell Publishing Ltd. 2006.

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  • Anthony M. Marino & Ján Zábojník, 2006. "Merger, Ease Of Entry And Entry Deterrence In A Dynamic Model," Journal of Industrial Economics, Wiley Blackwell, vol. 54(3), pages 397-423, September.
    • Handle: RePEc:bla:jindec:v:54:y:2006:i:3:p:397-423
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    Cited by:

    1. Patrice Bougette & Kai Hüschelrath & Kathrin Müller, 2014. "Do horizontal mergers induce entry? Evidence from the US airline industry," Applied Economics Letters, Taylor & Francis Journals, vol. 21(1), pages 31-34, January.
    2. Mason, Robin & Weeds, Helen, 2013. "Merger policy, entry, and entrepreneurship," European Economic Review, Elsevier, vol. 57(C), pages 23-38.
    3. Ray Chaudhuri, A., 2008. "A Dynamic Model of Endogenous Mergers and Trade Liberalization," Discussion Paper 2008-005, Tilburg University, Tilburg Law and Economic Center.
    4. Ramón Faulí-Oller & Joel Sandonís, 2007. "Downstream Mergers And Entry," Working Papers. Serie AD 2007-21, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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