All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC

Dragan Jovanovic, Christian Wey and Mengxi Zhang
''On the social welfare effects of runner-up mergers in concentrated markets''
( 2021, Vol. 41 No.4 )
This paper argues that it cannot be taken for granted that any merger that raises consumer surplus also increases social welfare. We assume a Cournot model with homogeneous goods, linear demand, and constant marginal costs, to show that a merger can raise consumer surplus while harming social welfare. Within this framework, we show that such an outcome depends on two conditions: the merger is between relatively small firms and it reduces concentration; that is, a constellation which can be characterized as a “runner-up” merger.
Keywords: Runner-up mergers, market shares, merger efficiencies, oligopoly, consumer and social welfare standard
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L4 - Antitrust Issues and Policies: General
Manuscript Received : Aug 24 2021 Manuscript Accepted : Dec 29 2021

  This abstract has been downloaded 440 times                The Full PDF of this paper has been downloaded 153793 times