Horizontal Mergers, Entry and Efficiency Defences

19 Pages Posted: 6 Jun 2001

See all articles by David M. Spector

David M. Spector

University of Angers - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP)

Date Written: May 2001

Abstract

This paper addresses the effect of horizontal mergers on prices.

It is shown that if firms compete in quantities and marginal costs are nondecreasing, any profitable merger failing to generate technological synergies must harm consumers through higher prices, irrespective of entry conditions in the industry. However this result does not hold if products are differentiated and firms compete in prices. The implications for merger policy are discussed.

Keywords: Horizontal mergers, competition policy, oligopoly theory

JEL Classification: D43, K21, L13, L41

Suggested Citation

Spector, David M., Horizontal Mergers, Entry and Efficiency Defences (May 2001). MIT Dept. of Economics Working Paper No. 01-18. Available at SSRN: https://ssrn.com/abstract=272181 or http://dx.doi.org/10.2139/ssrn.272181

David M. Spector (Contact Author)

University of Angers - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP)

Ecole Normale Superieure
48 boulevard Jourdan
75014 Paris
France

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