Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/179359
Authors: 
Motta, Massimo
Tarantino, Emanuele
Year of Publication: 
2017
Series/Report no.: 
Working Paper Series 17-01
Abstract: 
It has been suggested that mergers, by increasing concentration, raise incentives to invest and hence are pro-competitive. To study the effects of mergers, we rewrite a game with simultaneous price and cost-reducing investment choices as one where firms only choose prices, and make use of aggregative game theory. We find no support for that claim: absent effciency gains, the merger lowers total investments and consumer surplus.Only if it entails suffcient effciency gains, will it be pro-competitive. We also show there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments.
Subjects: 
horizontal mergers
innovation
investments
network-sharing agreements
competition
JEL: 
K22
D43
L13
L41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
Social Media Mentions:

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