The effect of horizontal mergers, when firms compete in prices and investments

摘要

Motivated by a number of high-profile antitrust cases, we study mergers when firms of-fer differentiated products and compete in prices and investments. Since the net effect of the merger is a priori ambiguous, we use aggregative game theory to sign it: we find that absent efficiency gains, the merger always reduces total investments and consumer sur-plus. We also prove that there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments. (c) 2021 Elsevier B.V. All rights reserved.