Analyzing Horizontal Mergers: Unilateral Effects in Product-Differentiated Markets

Horizontal Mergers in Spatially Differentiated Noncooperative Markets: a Comment

A merger of two Cournot firms, who produce spatially differentiated products and engage in spatial price discrimination, creates a firm that is in some sense larger than its rivals. Nevertheless, we show that the merged firm is unable to translate this larger size into profit-increasing behavior unless the difference in the costs of the merging firms at the affected consumer locations is "suffi...

Strategic Interactions, Market Information and Predicting the Effects of Mergers in Differentiated Product Markets

This paper reports an experiment conducted to examine the effects of changing the form of strategic interactions (Bertrand or Cournot), and changing underlying information conditions on the usefulness of the ‘ALM,’ a merger simulation device used by the U.S. Department of Justice. The experiment consists of twenty 60-period quadropolies. After period 40 a merger is induced. Behaviorally, Courno...

Preemptive Entry in Differentiated Product Markets

Models of spatial competition are typically static, and exhibit multiple freeentry equilibria. Incumbent firms can earn rents in equilibrium because any potential entrant expects a significantly lower market share (since it must fit into a niche between incumbent firms) along with fiercer price competition. Previous research has usually concentrated on the zero-profit equilibrium, at which ther...

Unilateral Effects of Mergers: The Simulation Approach

Mergers in Bidding Markets

We analyze the effects of mergers in first-price sealed-bid auctions on bidders’ equilibrium bidding functions and on revenue. We also study the incentives of bidders to merge given the private information they have. We develop two models, depending on how after-merger valuations are created. In the first, single-aspect model, the valuation of the merged firm is the maximum of the valuations of...