Open AccessOn Welfare Effects of Horizontal Mergers with Product Differentiation
Author(s) -
Marc Escrihuela Villar
Publication year - 2011
Publication title -
cuadernos de difusión
Language(s) - English
Resource type - Journals
eISSN - 1815-6606
pISSN - 1815-6592
DOI - 10.46631/jefas.2011.v16n30.01
Subject(s) - product differentiation , welfare , competition (biology) , product (mathematics) , industrial organization , business , degree (music) , economics , market economy , mathematics , ecology , biology , geometry , physics , acoustics
We use a non-spatial (Chamberlinian) product differentiation model to analyze the welfare effects of horizontal mergers with quantity competition. We argue that (i) mergers can be welfare enhancing if the degree of product differentiation increases after the merger; and, (ii) privately profitable mergers can also increase welfare. Consequently, in this paper we demonstrate that the degree of product differentiation is a crucial factor to assess the welfare effects of a merger.