Profitability of Horizontal Mergers in the Presence of Price Stickiness

Esfahani, Hamideh

doi:10.2139/ssrn.1832353

Abstract

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Profitability of Horizontal Mergers in the Presence of Price Stickiness

Hamideh Esfahani

affiliation not provided to SSRN

April 5, 2011

Quaderni DSE Working Paper No. 747

Abstract:
In this paper, we investigate the profitability of horizontal mergers of firms with price adjustments. We take a differential game approach and both the open-loop as well as the closed-loop equlibria are considered. We show that the merger incentive is determined by how fast the price adapts to the equilibrium level.

Number of Pages in PDF File: 16

Keywords: Differential game, Sticky price

JEL Classification: C73, D43, L13

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Date posted: May 17, 2011

Suggested Citation

Esfahani, Hamideh , Profitability of Horizontal Mergers in the Presence of Price Stickiness (April 5, 2011). Quaderni DSE Working Paper No. 747. Available at SSRN: http://ssrn.com/abstract=1832353 or http://dx.doi.org/10.2139/ssrn.1832353

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Hamideh Esfahani (Contact Author)

affiliation not provided to SSRN ( email )