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Introduction to Chapters VII and IX of Augustin Cournot, Researches into the Mathematical Principles of the Theory of Wealth

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  • Michael Salinger

Abstract

In November 2007, the European Commission accepted a set of guidelines concerning its review of non-horizontal mergers. The section on conglomerate mergers contains a discussion of the possibility that merging firms will bundle their products together. It reads, in part: "[W]hen producers of complementary goods are pricing independently, they will not take into account the positive effect of a drop in the price of their product on the sales of the other product. Depending on the market conditions, a merged firm may internalise this effect and may have a certain incentive to lower margins if this leads to higher overall profits (this incentive is often referred to as the “Cournot effect†)."

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  • Michael Salinger, 2008. "Introduction to Chapters VII and IX of Augustin Cournot, Researches into the Mathematical Principles of the Theory of Wealth," CPI Journal, Competition Policy International, vol. 4.
  • Handle: RePEc:cpi:cpijrn:4.1.2008:i=5064
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