| Title: |
Endogenous Mergers under Multi-Market |
| Authors: |
Tina Kao; Flavio Menezes; Jel Codes L |
| Contributors: |
The Pennsylvania State University CiteSeerX Archives |
| Source: |
http://cbe.anu.edu.au/research/papers/pdf/wp507.pdf. |
| Publication Year: |
2009 |
| Collection: |
CiteSeerX |
| Description: |
This paper examines a simple model of strategic interactions among rms that face at least some of the same rivals in two related markets (for goods 1 and 2). It shows that when rms compete in quantity, market prices increase as the degree of multi-market contact increases. However, the welfare consequences of multi-market contact are more complex and depend on how two fundamental forces play out. The rst is the selection e¤ect, which acts to increase welfare, as shutting down the relatively more ine ¢ cient rm is bene cial. The second op-posing e¤ect is the internalisation of the Cournot externality e¤ect; reducing the production of good 2 allows rms to sustain a higher price for good 1. This works to increase prices and, therefore, decrease consumer surplus (but increasing producer surplus). These two e¤ects are inuenced by the degree of asymmetry between markets 1 and 2 and the degree of substitutability between goods 1 and 2. JEL Classi cation: L11, L13, L44. |
| Document Type: |
text |
| File Description: |
application/pdf |
| Language: |
English |
| Relation: |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.552.244; http://cbe.anu.edu.au/research/papers/pdf/wp507.pdf |
| Availability: |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.552.244; http://cbe.anu.edu.au/research/papers/pdf/wp507.pdf |
| Rights: |
Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: |
edsbas.5929E2B8 |
| Database: |
BASE |