IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v66y2018i1p95-125.html

Do Merger Efficiencies Always Mitigate Price Increases?

Author

Listed:
  • Zhiqi Chen
  • Gang Li

Abstract

In a Cournot model with differentiated products, we demonstrate that merger efficiencies in the form of lower marginal costs for the merging firms (the insiders) lead to higher post†merger prices under certain conditions. Specifically, when the degree of substitutability between the two insiders is not too high relative to that between an insider and an outsider, increased efficiencies may exert upward rather than downward pressure on the prices of the merging firms. Our results suggest that in cases where firms engage in quantity competition, antitrust authorities should not presume that efficiencies will necessarily mitigate the anticompetitive effects of the merger.

Suggested Citation

  • Zhiqi Chen & Gang Li, 2018. "Do Merger Efficiencies Always Mitigate Price Increases?," Journal of Industrial Economics, Wiley Blackwell, vol. 66(1), pages 95-125, March.
    • Handle: RePEc:bla:jindec:v:66:y:2018:i:1:p:95-125
    DOI: 10.1111/joie.12162
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/joie.12162
    Download Restriction: no
    File URL: https://libkey.io/10.1111/joie.12162?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Justin P. Johnson & Andrew Rhodes, 2021. "Multiproduct mergers and quality competition," RAND Journal of Economics, RAND Corporation, vol. 52(3), pages 633-661, September.
    2. Firth, Anton & Zhang, Bo & Yang, Aidong, 2019. "Quantification of global waste heat and its environmental effects," Applied Energy, Elsevier, vol. 235(C), pages 1314-1334.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:66:y:2018:i:1:p:95-125. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.