Welfare Enhancing Mergers under Product Differentiation
We follow the duopoly framework with differentiated products as in Singh and Vives (1984) and Zanchettin (2006) and examine the welfare effects of a merger between two asymmetric firms. We find that for quantity competition, the merger increases total welfare if the cost asymmetry falls into a specific range. Furthermore, this parameter range widens if the products are closer substitutes. On the other hand, mergers are never welfare enhancing in this setting when firms compete in prices.
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- Joseph Farrell and Carl Shapiro., 1988.
"Horizontal Mergers: An Equilibrium Analysis,"
Economics Working Papers
8880, University of California at Berkeley.
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- repec:cup:cbooks:9780521016919 is not listed on IDEAS
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