Motivated by a number of high-profile antitrust cases, we study mergers when firms offer differentiated products and compete in prices and investments. Since the net effect of the merger is a priori ambiguous, we use aggregative game theory to sign it: we find thatabsent efficiency gains, the merger always reduces total investments and consumer surplus. We also prove that there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments.

The effect of horizontal mergers, when firms compete in prices and investments / Motta, Massimo; Tarantino, Emanuele. - In: INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION. - ISSN 0167-7187. - 78:(2021), pp. 1-20. [10.1016/j.ijindorg.2021.102774]

The effect of horizontal mergers, when firms compete in prices and investments

Tarantino, Emanuele
2021

Abstract

Motivated by a number of high-profile antitrust cases, we study mergers when firms offer differentiated products and compete in prices and investments. Since the net effect of the merger is a priori ambiguous, we use aggregative game theory to sign it: we find thatabsent efficiency gains, the merger always reduces total investments and consumer surplus. We also prove that there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments.
2021
Horizontal mergers, Innovation, Investments, Competition
The effect of horizontal mergers, when firms compete in prices and investments / Motta, Massimo; Tarantino, Emanuele. - In: INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION. - ISSN 0167-7187. - 78:(2021), pp. 1-20. [10.1016/j.ijindorg.2021.102774]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/211375
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