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Equilibrium mergers in a composite good industry with efficiencies

Author

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  • Cristina PARDO-GARCIA
  • Jose J. SEMPERE-MONERRIS
Abstract
This paper studies equilibrium merging behavior in composite good industries. Component producers face the option to either merge with a similar component producer (horizontal merger) or a complementary one (vertical merger) of a composite good. Focusing only on strategic reasons, vertical mergers arise at equilibrium only when composite goods are very differentiated or when the number of producers is large while horizontal mergers arise otherwise. When efficiencies are considered, higher marginal cost savings are required for a horizontal merger in a composite industry not to result in a price increase as compared with those required for a regular industry. This finding can be used by antitrust authorities to be more demanding when dealing with horizontal mergers in composite goods industries. Copyright The Author(s) 2015
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Cristina PARDO-GARCIA & Jose J. SEMPERE-MONERRIS, 2015. "Equilibrium mergers in a composite good industry with efficiencies," LIDAM Reprints CORE 2787, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2787
    Note: In : Journal of Spanish Economic Association, 6(1), 101-127, 2015
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    Cited by:

    1. Jéssica Dutra & Tarun Sabarwal, 2020. "Antitrust analysis with upward pricing pressure and cost efficiencies," PLOS ONE, Public Library of Science, vol. 15(1), pages 1-31, January.
    2. KORNEK, Urik & LESSMANN, Kai & TULKENS, Henry, 2014. "Transferable and non transferable utility implementations of coalitional stability in integrated assessment models," LIDAM Discussion Papers CORE 2014035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Chernenko, Natalya & Moiseienko, Tetiana & Korohodova, Olena & Hlushchenko, Yaroslava, 2021. "Analysis of mergers and acquisitions between 2009 and 2020," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 30(4), pages 1-18.
    4. Álvarez-SanJaime, Óscar & Cantos-Sanchez, Pedro & Moner-Colonques, Rafael & Sempere-Monerris, Jose J., 2020. "Pricing and infrastructure fees in shaping cooperation in a model of high-speed rail and airline competition," Transportation Research Part B: Methodological, Elsevier, vol. 140(C), pages 22-41.

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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