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Losses from horizontal merger and collusion

Author

Listed:
  • Hamid Beladi

    (University of Texas at San Antonio)

  • Arijit Mukherjee

    (Nottingham University Business School
    CESifo
    GRU, City University of Hong Kong
    INFER)

Abstract

We show that the implications of a merger on collusion sustainability change significantly from the extant literature if merger is not profitable in the punishment subgame where firms play non-cooperative Cournot–Nash game. Merger either does not affect collusion sustainability or it may decrease or increase collusion sustainability, depending on the output allocation for the merged firm. Our paper has the following implication for antitrust policies. If merger is observed, the authority will expect an industry-wide collusion, since merger will occur in our analysis provided it increases collusion sustainability.

Suggested Citation

  • Hamid Beladi & Arijit Mukherjee, 2024. "Losses from horizontal merger and collusion," Journal of Economics, Springer, vol. 142(3), pages 277-289, August.
    • Handle: RePEc:kap:jeczfn:v:142:y:2024:i:3:d:10.1007_s00712-024-00857-y
    DOI: 10.1007/s00712-024-00857-y
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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