Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129580
Authors: 
Ghosh, Arghya
Morita, Hodaka
Wang, Chengsi
Year of Publication: 
2014
Series/Report no.: 
Working Paper Series, Department of Economics, University of Mannheim 14-27
Abstract: 
We study welfare effects of horizontal mergers under a successive oligopoly model and find that downstream mergers can increase welfare if they reduce input prices. The lower input price shifts some input production from cost- inefficient upstream firms to cost-efficient ones. Also, the lower input price makes upstream entry less attractive, reduces the number of upstream entrants, and decreases their average costs in the presence of fixed entry costs. We identity necessary and sufficient conditions for a reduction in input prices and welfare-improving horizontal mergers under a general demand function. Qualitative nature of our findings remains unchanged for upstream mergers.
Subjects: 
merger
successive oligopoly
welfare
reallocation
rationalization
JEL: 
L13
L41
L42
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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