Non-Horizontal Mergers with Investments into Compatibility

34 Pages Posted: 9 May 2019

Date Written: 2019

Abstract

We set up a model to analyze the effects of mergers between sellers of complementary components where firms invest in compatibility and can engage in bundling. We consider the impact of merger on prices, investment and consumer surplus. We also analyse when the merged firm may have an incentive and ability to foreclose rivals.

Keywords: mergers, complementary goods, welfare effects, foreclosure, compatibility

JEL Classification: L130, L410

Suggested Citation

Langus, Gregor and Padilla, Jorge, Non-Horizontal Mergers with Investments into Compatibility (2019). CESifo Working Paper No. 7617, Available at SSRN: https://ssrn.com/abstract=3384308 or http://dx.doi.org/10.2139/ssrn.3384308

Gregor Langus (Contact Author)

ECA Economics GmbH ( email )

Avenue Louise 500
Brussels
Belgium

Jorge Padilla

Compass Lexecon ( email )

Paseo de la Castellana 7
Madrid, 28046
Spain

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