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HORIZONTAL MERGERS, STRUCTURAL REMEDIES, AND CONSUMER WELFARE IN A COURNOT OLIGOPOLY WITH ASSETS *
Author(s) -
VERGÉ THIBAUD
Publication year - 2010
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2010.00432.x
Subject(s) - divestment , cournot competition , oligopoly , order (exchange) , competition (biology) , consumer welfare , business , welfare , industrial organization , microeconomics , market structure , economics , market economy , finance , ecology , biology
Competition authorities sometimes require that firms divest some of their assets to rivals in order to allow a merger to take place. This paper extends the results of Farrell and Shapiro [1990a] and shows that, in the absence of technological synergies, a merger is highly unlikely to benefit consumers, even if it is subjected to appropriate structural remedies. For instance, a merger may ultimately lead to a lower price only if at least two different firms acquire the divested assets, and if the merging parties had relatively important pre‐merger market shares.