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Mergers between Asymmetric Firms: Profitability and Welfare
Author(s) -
FaulíOller Ramon
Publication year - 2002
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00284
Subject(s) - profitability index , welfare , economics , consumer welfare , market share , microeconomics , information asymmetry , monetary economics , industrial organization , market economy , finance
Using only information on the degree of concavity of demand and observable structural variables such as the market shares of firms, a necessary and sufficient condition for a merger to increase welfare is derived. On the profitability side, we obtain that when market size decreases merger profitability increases.