6533b838fe1ef96bd12a48e8
RESEARCH PRODUCT
Equilibrium mergers in a composite good industry with efficiencies
José J. Sempere-monerrisCristina Pardo-garciasubject
Marginal costcomposite goods substitutes complements horizontal merger complementary merger efficiency effects UPPI diversion ratioL13business.industryL41Diversion ratioComputingMilieux_PERSONALCOMPUTINGPrice pressureInternational tradejel:L41Composite goodsSubstitutesComposite goodVertical mergerHorizontal mergerjel:L13Economicsddc:330businessGeneral Economics Econometrics and FinanceMerge (version control)Industrial organizationComplementsPublic financeEfficiency effectsdescription
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 (complementary merger) of a composite good. Focusing only on strategic reasons, complementary mergers arise at equilibrium only when composite goods are very differentiated while horizontal mergers otherwise. Next, when efficiencies are considered, the level of marginal cost saving required for a horizontal merger in a composite industry to result in a non- increase in the upward price pressure index (UPPI) is greater as compared with the one in a regular industry. This result can be used by antitrust authorities to be more demanding when dealing with horizontal mergers in composite goods industries.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2014-12-20 |