Brekke, Kurt R.; Siciliani, Luigi; Straume, Odd Rune - 2015
We study the effects of horizontal mergers when firms compete on quality and price. Two key factors are identified: (i …) the magnitude of variable quality costs, and (ii) the relative magnitudes of cross-quality and cross-price effects on … demand. The merging firms will increase (reduce) both quality and price if the degree of competition is sufficiently stronger …