Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/27959

TitleHorizontal mergers and product quality
Author(s)Brekke, Kurt R.
Siciliani, Luigi
Straume, Odd Rune
KeywordsHorizontal mergers
Quality
Spatial competition
Issue date2014
PublisherUniversidade 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.
TypeWorking paper
URIhttp://hdl.handle.net/1822/27959
Publisher versionhttp://www.nipe.eeg.uminho.pt/Uploads/NIPE_WP_07_2014.pdf
Peer-Reviewedno
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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