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Competition in some markets is a contest. This paper studies the merger incentives in such markets. Merger can be profitable. The profitability depends on the post-merger contest structure, the discriminatory power of the contest and on the number of contestants.
Persistent link: https://www.econbiz.de/10010310200
To be represented by more than one contestant in a contest has advantages and disadvantages. This paper determines the conditions under which it is favorable to send several agents into the contest.
Persistent link: https://www.econbiz.de/10010310208
We propose a model in which mergers exert a more pronounced effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare-improving even if costs are linear. The results help to reconcile theory with...
Persistent link: https://www.econbiz.de/10010310276