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Profitability of Horizontal Mergers in the Presence of Price Stickiness

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Abstract

In this paper, we investigate the profitability of horizontal mergers of firms with price adjustments. We take a di erential game approach and both the open-loop as well as the closed-loop equlibria are considered. We show that the merger incentive is determined by how fast the price adapts to the equilibrium level.

Suggested Citation

  • H. Esfahani, 2011. "Profitability of Horizontal Mergers in the Presence of Price Stickiness," Working Papers wp747, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp747
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    2. Lin, Xuxun & Wang, Haiyan, 2022. "Dynamic pricing for online information services considering service duration and quality level," Omega, Elsevier, vol. 109(C).
    3. Dai, Miao & Benchekroun, Hassan & Long, Ngo Van, 2022. "On the profitability of cross-ownership in Cournot nonrenewable resource oligopolies: Stock size matters," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    4. Wei Peng & Baogui Xin & Yekyung Kwon, 2019. "Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility," IJERPH, MDPI, vol. 16(23), pages 1-24, November.
    5. Lin, Xiaogang & Chen, Danna & Zhou, Yong-Wu & Lin, Qiang, 2022. "Horizontal mergers in low carbon manufacturing," European Journal of Operational Research, Elsevier, vol. 297(1), pages 359-368.
    6. Mehdi Fadaee & Hamideh Esfahani, 2023. "Do oligopolistic firms benefit from being forced to act non‐strategically?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 127-147, March.
    7. Soumya Kanta Mishra & Sumit Sarkar & Apratim Guha, 2025. "Should Both Platforms Be Kept Operational After a Merger of Two Social Media Businesses?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(5), pages 2911-2928, July.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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