Get access

HORIZONTAL MERGERS, STRUCTURAL REMEDIES, AND CONSUMER WELFARE IN A COURNOT OLIGOPOLY WITH ASSETS

Authors


  • *I would like to thank Philippe Choné, Philippe Février, Bruno Jullien, Laurent Linnemer, Robin Mason, Patrick Rey and participants at the 2006 ASSET Meeting (Lisbon) and the 2008 EARIE Conference (Toulouse) for helpful discussions and comments. I am also grateful to the Editor and two anonymous referees for their comments.

Abstract

Competition authorities sometimes require that firms divest some of their assets to rivals in order to allow a merger to take place. This paper extends the results of Farrell and Shapiro [1990a] and shows that, in the absence of technological synergies, a merger is highly unlikely to benefit consumers, even if it is subjected to appropriate structural remedies. For instance, a merger may ultimately lead to a lower price only if at least two different firms acquire the divested assets, and if the merging parties had relatively important pre-merger market shares.

Ancillary