Welfare-enhancing mergers under product differentiation

Date

2010

Authors

Kao, Tina
Menezes, Flavio

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Publisher

Wiley-Blackwell

Abstract

In this paper we consider a model of duopoly with differentiated products to examine the welfare effects of a merger between two asymmetric firms. We find that, for quantity competition, the parameter range for welfare-enhancing merger 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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Citation

Source

Manchester School, The

Type

Journal article

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License Rights

Restricted until

2037-12-31