Please use this identifier to cite or link to this item:
https://hdl.handle.net/1822/27959
Title: | Horizontal mergers and product quality |
Author(s): | Brekke, Kurt R. Siciliani, Luigi Straume, Odd Rune |
Keywords: | Horizontal mergers Quality Spatial competition |
Issue date: | 2014 |
Publisher: | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
Abstract(s): | Using a spatial competition framework with three ex ante identical firms, we study the effects of a horizontal merger on quality, price and welfare. The merging firms always reduce quality. They also increase prices if demand responsiveness to quality is sufficiently low. The non-merging firm, on the other hand, always responds by increasing both quality and prices. Overall, a merger leads to higher average prices and quality in the market. The welfare implications of a merger are not clear-cut. If the demand responsiveness to quality is sufficiently high, some consumers benefit from the merger and social welfare might also increase. |
Type: | Working paper |
URI: | https://hdl.handle.net/1822/27959 |
Publisher version: | http://www.nipe.eeg.uminho.pt/Uploads/NIPE_WP_07_2014.pdf |
Peer-Reviewed: | no |
Access: | Open access |
Appears in Collections: | NIPE - Documentos de Trabalho |
Files in This Item:
File | Description | Size | Format | |
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NIPE_WP_07_2014.pdf | Horizontal Mergers and Product Quality | 738,96 kB | Adobe PDF | View/Open |