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http://hdl.handle.net/10419/29759
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| Title: | | Mergers in imperfectly segmented markets  |
| Authors: | | Baake, Pio Wey, Christian |
| Issue Date: | | 2009 |
| Series/Report no.: | | Discussion papers // German Institute for Economic Research 919 |
| Abstract: | | We present a model with firms selling (homogeneous) products in two imperfectly segmented markets (a high-demand and a low-demand market). Buyers are mobile but restricted by transportation costs, so that imperfect arbitrage occurs when prices differ in both markets. We show that equilibria are distorted away from Cournot outcomes to prevent consumer arbitrage. Furthermore, a merger can lead to an equilibrium in which only the high-demand market is served. This is more likely (i) the lower consumers' transportation costs and (ii) the higher the concentration of the industry. Therefore, merger incentives are much larger than standard analysis suggests. |
| Subjects: | | Imperfect market segmentation oligopoly price discrimination consumer arbitrage mergers |
| JEL: | | D43 L13 L41 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des DIW DIW-Diskussionspapiere
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