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SEQUENTIAL MERGERS WITH DIFFERING DIFFERENTIATION LEVELS *
Author(s) -
EBINA TAKESHI,
SHIMIZU DAISUKE
Publication year - 2009
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.2009.00373.x
Subject(s) - product differentiation , incentive , business , set (abstract data type) , product (mathematics) , industrial organization , commerce , microeconomics , economics , cournot competition , geometry , mathematics , computer science , programming language
We study sequential merger incentives under presence of product differentiation. Two sets of firms produce closely related goods, whereas each set produces more differentiated goods. Merger incentives under product differentiation are found to be stronger for two firms producing closely related goods than more differentiated goods. Also, after one merger, other firms are willing to follow with their own merger, resulting in sequential mergers. This result is consistent with the recent mergers in the video game software industry in Japan.