Horizontal Mergers, Structural Remedies, And Consumer Welfare In A Cournot Oligopoly With Assets
Competition authorities sometimes require that firms divest some of their assets to rivalsin order to allow a merger to take place. This paper extends the results of Farrell andShapiro [1990a] and shows that, in the absence of technological synergies, a merger ishighly unlikely to benefit consumers, even if it is subjected to appropriate structuralremedies. For instance, a merger may ultimately lead to a lower price only if at leasttwo different firms acquire the divested assets, and if the merging parties had relativelyimportant pre-merger market shares.
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Volume (Year): 58 (2010)
Issue (Month): 4 (December)
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