Horizontal Mergers, Structural Remedies, and Consumer Welfare in a Cournot Oligopoly with Assets

Abstract:     
Competition authorities sometimes require that firms divest some of their assets to rivals in order to allow a merger to take place. This paper extends the results of Farrell and Shapiro [1990a] and shows that, in the absence of technological synergies, a merger is highly unlikely to benefit consumers, even if it is subjected to appropriate structural remedies. For instance, a merger may ultimately lead to a lower price only if at least two different firms acquire the divested assets, and if the merging parties had relatively important pre-merger market shares.

Number of Pages in PDF File: 19

JEL Classification: D43, K21, L13, L41

Accepted Paper Series