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POST-MERGER PRODUCT REPOSITIONING -super-

Author

Listed:
  • AMIT GANDHI
  • LUKE FROEB
  • STEVEN TSCHANTZ
  • GREGORY J. WERDEN

Abstract

This paper analyzes the effects of mergers between firms competing by simultaneously choosing price and location. Products combined by a merger are repositioned away from each other to reduce cannibalization, and non-merging substitutes are, in response, repositioned between the merged products. This repositioning greatly reduces the merged firm's incentive to raise prices and thus substantially mitigates the anticompetitive effects of the merger. Computation of, and selection among, equilibria is done with a novel technique known as the stochastic response dynamic , which does not require the computation of first-order conditions. Copyright 2008 The Authors.

Suggested Citation

  • Amit Gandhi & Luke Froeb & Steven Tschantz & Gregory J. Werden, 2008. "POST-MERGER PRODUCT REPOSITIONING -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 49-67, March.
  • Handle: RePEc:bla:jindec:v:56:y:2008:i:1:p:49-67
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-6451.2008.00332.x
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    References listed on IDEAS

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    1. Drew Fudenberg & David K. Levine, 1998. "The Theory of Learning in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061945, January.
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    Cited by:

    1. Andrew Sweeting, 2007. "Dynamic Product Repositioning in Differentiated Product Markets: The Case of Format Switching in the Commercial Radio Industry," NBER Working Papers 13522, National Bureau of Economic Research, Inc.
    2. Jaskold Gabszewicz, Jean & Marini, Marco A. & Tarola, Ornella, 2017. "Endogenous Mergers in Markets with Vertically Differentiated Products," MPRA Paper 80528, University Library of Munich, Germany.
    3. Gabszewicz, Jean J. & Marini, Marco A. & Tarola, Ornella, 2017. "Vertical differentiation and collusion: Pruning or proliferation?," Research in Economics, Elsevier, vol. 71(1), pages 129-139.
    4. Lucinda, Claudio R. & Filho, Arthur Barrionuevo, 2009. "Using Spatial Covariance Function for Antitrust Market Delineation," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 29(1), May.
    5. Andrew Sweeting, 2010. "The effects of mergers on product positioning: evidence from the music radio industry," RAND Journal of Economics, RAND Corporation, vol. 41(2), pages 372-397.
    6. Jean J. Gabszewicz & Marco A. Marini & Ornella Tarola, 2016. "Vertical Differentiation and Collusion: Cannibalization or Proliferation?," Working Papers 2016.15, Fondazione Eni Enrico Mattei.
    7. repec:kap:jincot:v:18:y:2018:i:1:d:10.1007_s10842-017-0251-6 is not listed on IDEAS
    8. Przemysław Jeziorski, 2014. "Estimation of cost efficiencies from mergers: application to US radio," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 816-846, December.
    9. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.
    10. Marini, Marco A., 2016. "Collusive Agreements in Vertically Differentiated Markets," MPRA Paper 75369, University Library of Munich, Germany.
    11. Michaela Draganska & Michael Mazzeo & Katja Seim, 2009. "Beyond plain vanilla: Modeling joint product assortment and pricing decisions," Quantitative Marketing and Economics (QME), Springer, vol. 7(2), pages 105-146, June.
    12. repec:kap:jculte:v:42:y:2018:i:1:d:10.1007_s10824-016-9276-7 is not listed on IDEAS
    13. repec:bla:jindec:v:65:y:2017:i:2:p:439-468 is not listed on IDEAS
    14. repec:ebl:ecbull:v:30:y:2010:i:1:p:94-102 is not listed on IDEAS

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