Experiments on horizontal mergers: Does size matter?

Current Department of Justice merger guidelines assume that merging the capacities of two firms will translate into an equivalent increase in market shares. Size matters. Economic theory asserts size is determined by marginal revenue and marginal cost not capacity. Size does not matter. In this paper we run horizontal merger experiments and find that the firms tend to share monopoly profits regardless of the size of the firms.

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Year of publication:	2012
Authors:	Beckman, Steven R. ; DeAngelo, Gregory ; James Smith, W.
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 117.2012, 3, p. 537-539
Publisher:	Elsevier
Subject:	Market share \| Profits \| Firm size \| Mergers

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Type of publication:	Article
Classification:	K2 - Regulation and Business Law ; L1 - Market Structure, Firm Strategy, and Market Performance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010594055