Horizontal mergers with free entry
نویسنده
چکیده
We consider the impact of horizontal mergers in the presence of free entry and exit. In contrast to much of the previous literature on horizontal mergers, our model yields predictions that seem intuitively reasonable: with only moderate cost synergies mergers of a small number of industry participants are beneficial (even under quantity competition), there is no “free rider problem” in that insiders always benefit more than outsiders, and quantity-setting and price-setting games yield similar predictions. We also find that all privately beneficial mergers are also socially beneficial. JEL Classification Codes: L13, L22
منابع مشابه
Entry Deterrence by Non-Horizontal Merger
We study when and how pure non-horizontal mergers, whether cross-product or vertical, can deter new entry. Organizational mergers implicitly commit firms to more aggressive price competition. Because heightened competition deters entry, mergers can occur in equilibrium even when, absent entry considerations, they do not. We show that, in order to prevent a flood of entrants, mergers arise even ...
متن کاملHorizontal mergers in the presence of vertical relationships
We study welfare effects of horizontal mergers under a successive oligopoly model and find that downstream mergers can increase welfare if they reduce input prices. The lower input price shifts some input production from costinefficient upstream firms to cost-efficient ones. Also, the lower input price makes upstream entry less attractive, reduces the number of upstream entrants, and decreases ...
متن کاملAirline Mergers and the Potential Entry Defense
Horizontal mergers may be approved if antitrust authorities believe that new entry would limit any anticompetitive effects. This argument (‘the potential entry defense’) has led to mergers being approved in concentrated markets in several industries, including airlines. However, entry will be both less likely and less able to constrain market power if the pre-merger entry process has already se...
متن کاملEntry for merger with flexible manufacturing: Implications for competition policy
This paper studies a model of product variety with flexible manufacturers when, contrary to prior work, atomistic entry occurs prior to horizontal integration. In this model, more lax antitrust laws that allow for fewer and more concentrated merged firms lead to a greater extent of excess entry. Optimal policy permits no horizontal mergers when demand is perfectly inelastic, but may permit some...
متن کاملNumerical Modeling of Launching Offshore Jackets from Transportation Barge & the Significance of Water Entry Forces on Horizontal Jacket Members
Development of a numerical model which describes launching of offshore jackets from barge is presented in this paper. In this model, in addition to capabilities of commercial softwares, water entry forces on jacket members and an implicit Newmark solution technique are included. The results are in general agreement with other numerical software’s available (SACS). Fluid forces acting on jacket ...
متن کامل