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Spatial Price Discrimination and Merger: The N‐Firm Case
Author(s) -
Heywood John S.,
Monaco Kristen,
Rothschild R.
Publication year - 2001
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2001.tb00362.x
Subject(s) - inefficiency , profit (economics) , price discrimination , mergers and acquisitions , economics , microeconomics , industrial organization , business , econometrics , finance
The consequences of merger are analyzed in an N ‐firm model of spatial price discrimination. The merger occurs with known probability after location decisions have been made. The possibility of merger alters locations, generates inefficiency, and increases the profit of the merging firms. In the case of corner mergers, but never in the case of interior mergers, the possibility of merger may also reduce the profit of the excluded firms.