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Competition enhancings measures and scope economies: a welfare appraisal



This paper examines welfare changes before the introduction of more competition in technologically related markets. We develop a simple two-market duopoly with product differentiation where a multi-product firm competes with a different single-product firm in each market. Two competition enhancing measures are considered, divestiture of the multi-product firm and entry of single-product firms in one of the markets. The results obtained indicate that more competition may lead to a welfare reduction. Our analysis points out the relevance of the type and size of economies of scope, the particular way of introducing more competition and the degree of product differentiation.

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  • Pedro Cantos-Sánchez & Rafael Moner-Colonques & José J. Sempere-Monerris, 2003. "Competition enhancings measures and scope economies: a welfare appraisal," Investigaciones Economicas, Fundación SEPI, vol. 27(1), pages 97-123, January.
  • Handle: RePEc:iec:inveco:v:27:y:2003:i:1:p:97-123

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    Cited by:

    1. Maria Jose Gil-Molto & Joanna Poyago-Theotoky, 2006. "Flexible vs Dedicated Technology Adoption in the Presence of a Public Firm," Discussion Paper Series 2006_1, Department of Economics, Loughborough University, revised Jan 2006.
    2. Pires Cesaltina Pacheco & Catalão-Lopes Margarida, 2013. "Economies of Scope, Entry Deterrence and Welfare," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(1), pages 419-452, June.
    3. Cesaltina Pacheco Pires & Margarida Catalão-Lopes, 2012. "Scope economies, entry deterrence and welfare," CEFAGE-UE Working Papers 2012_11, University of Evora, CEFAGE-UE (Portugal).

    More about this item


    Cost complementarity/substitutability; fixed cost subadditivity; welfare;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other


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