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An Aggregative Games Approach to Merger Analysis in Multiproduct‐Firm Oligopoly

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  • Volker Nocke
  • Nicolas Schutz

Abstract

Using an aggregative games approach, we analyze horizontal mergers in a model of multiproduct‐firm price competition with CES and logit demand, allowing for arbitrary firm and product heterogeneity. We provide conditions under which a merger raises consumer surplus, and establish the dynamic optimality of a myopic, consumer‐surplus‐based merger approval policy. We also study the aggregate surplus and external effects of a merger. Finally, we show that the market power effect of a merger, defined as the welfare effect in the absence of merger‐specific synergies, can be approximated by the induced, naively computed change in the Herfindahl index.

Suggested Citation

  • Volker Nocke & Nicolas Schutz, 2025. "An Aggregative Games Approach to Merger Analysis in Multiproduct‐Firm Oligopoly," RAND Journal of Economics, RAND Corporation, vol. 56(3), pages 233-250, September.
    • Handle: RePEc:bla:randje:v:56:y:2025:i:3:p:233-250
    DOI: 10.1111/1756-2171.12500
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