Bourreau, Marc and Jullien, Bruno (2017) Mergers, investments and demand expansion. TSE Working Paper, n. 17-880, Toulouse

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Abstract

In this paper, we study the impact of a merger to monopoly on prices and investments. Two single-product firms compete in prices and coverage for a new technology. In equilibrium, one firm covers a larger territory than its competitor with the new technology, leading to singleproduct and multi-product zones, and sets a higher uniform price. If the firms merge, the merged entity can set different prices and coverage for the two products. We find that the merger raises prices and total coverage, but reduces the coverage of the multi-product zone. We also show that the merger can increase total welfare and consumer welfare.

Item Type: Monograph (Working Paper)
Language: English
Date: December 2017
Place of Publication: Toulouse
Uncontrolled Keywords: horizontal mergers, investments, competition
JEL Classification: D43 - Oligopoly and Other Forms of Market Imperfection
L13 - Oligopoly and Other Imperfect Markets
L40 - General
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 17 Apr 2018 07:30
Last Modified: 29 Jun 2021 09:26
OAI Identifier: oai:tse-fr.eu:32350
URI: https://publications.ut-capitole.fr/id/eprint/25807

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