Using only information on the degree of concavity of demand and observable structural variables as the market share of firms, a necessary and sufficient condition for a merger to increase welfare is derived. On the profitability side, we obtain that when market size decreases merger...

In this paper we analyze firms' ability to tacitly collude on pricesin an infinitely repeated duopoly game of vertical productdifferentiation. We show that firms collude if and only if their discountfactor is high enough, i.e. if they value future profits sufficiently. We alsoshow that a lower...

This study analyses the evolution of market power in the banking sectors of the European Union based on the estimation of Lerner indices. Using a panel of 18,810 observations of the banking industries of Germany, France, Italy, Spain and the United Kingdom during the period 1992-99, the results...

Financial integration in Europe should affect the competition between markets and intermediaries and generate a convergence of both interest rates and margins among the different countries. This paper analyses the evolution of the convergence in interest rates and the level of competition and...

Competition has long been regarded as productivity enhancing. Understanding the mechanism by which competition affects innovation and productivity is therefore an important topic for economic policy. The main contribution of this paper is to disentangle the relationship between competition and...

Salant et al. (1983) showed in a Cournot setting that horizontal mergers are unprofitable because outsiders react by increasing their output. We show that this negative effect may be compensated by the positive effect that horizontal mergers have on the buyer power of merging firms in input markets.

A monopolist retailer facing two suppliers producing two symmetric and independent goods improves its bargaining position by commiting to sell only one good. We analyze if this advantage extends to the case where there are two undierentiated retailers competing in the same market. With linear...

In this paper, we show that downstream mergers increase the incentives of an up-stream firm to invest in cost-reducing R&D. The upstream firm revenues increase with industry profits, which in turn increase with concentration downstream and this explains the positive link between concentration...

In the context of the recent electricity market reforms in Europe and the US, we evaluate the performance of the Spanish pool. Our method is not based on price-cost estimates but rather on the different behavior of operators with higher market power as compared to the behavior of more...

We consider two (symmetric) upstream firms producing independent goods that sell to consumers through symmetric retailers. The distinguishing feature of retailers is that they have a selling capacity, in the sense, that there is an upper limit in the total units of the two goods they can sell....