Welfare-Reducing Mergers in Differentiated Oligopolies with Free Entry.

• Autores: NISVAN ERKAL, Daniel Piccinin
• Localización: Economic record, ISSN 0013-0249, Vol. 86, Nº. 273, 2010, págs. 178-184
• Idioma: inglés
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• Resumen

  • Antitrust authorities regard the possibility of post-merger entry and merger-generated efficiencies as two factors that may counteract the negative effects of horizontal mergers. This article shows that in differentiated oligopolies with linear demand, all entry-inducing mergers harm consumer welfare. This is because if there is entry following a merger, it implies that the merger-generated efficiencies were not sufficiently large. Mergers which induce exit, owing to sufficiently high cost savings, always improve consumer welfare.