Horizontal Mergers, Structural Remedies, and Consumer Welfare in a Cournot Oligopoly with Assets
affiliation not provided to SSRN
December 24, 2010
The Journal of Industrial Economics, Vol. 58, Issue 4, pp. 723-741, 2010
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
Date posted: December 30, 2010