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The Farrell and Shapiro condition revisited

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  • Duarte Brito

    () (IET, FCT-Universidade Nova de Lisboa)

Abstract

The purpose of this paper is to study the consequences of using the Farrell and Shapiro (1990) sufficient condition for merger approval to sectors in which a downstream horizontal merger may also affect upstream firms. As will be shown below, in some circumstances the sign of the relevant external effect can no longer be established by considering the merger as a sequence of in finitesimal mergers, each corresponding to a marginal change in output.

Suggested Citation

  • Duarte Brito, 2007. "The Farrell and Shapiro condition revisited," IET Working Papers Series 01/2007, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology.
    • Handle: RePEc:ieu:wpaper:01
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    File URL: http://run.unl.pt/handle/10362/1690
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    2. al-Nowaihi, A. & Levine, P. L., 1985. "The stability of the cournot oligopoly model: A reassessment," Journal of Economic Theory, Elsevier, vol. 35(2), pages 307-321, August.
    3. F. H. Hahn, 1962. "The Stability of the Cournot Oligopoly Solution," Review of Economic Studies, Oxford University Press, vol. 29(4), pages 329-331.
    4. Barros, Pedro P. & Cabral, Luis, 1994. "Merger policy in open economies," European Economic Review, Elsevier, vol. 38(5), pages 1041-1055, May.
    5. Barros, Pedro Luis Pita, 1997. "Approval Rules for Sequential Horizontal Mergers," CEPR Discussion Papers 1764, C.E.P.R. Discussion Papers.
    6. Dobson, Paul W & Waterson, Michael, 1997. "Countervailing Power and Consumer Prices," Economic Journal, Royal Economic Society, vol. 107(441), pages 418-430, March.
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