Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/243050 
Year of Publication: 
2021
Series/Report no.: 
DICE Discussion Paper No. 371
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
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 small firms (i.e., relatively inefficient firms) and it reduces concentration; that is, a constellation which can be characterized as a "runner-up" merger.
Subjects: 
Runner-up Mergers
Efficiencies
Oligopoly
welfare
JEL: 
K21
L13
L41
ISBN: 
978-3-86304-370-4
Document Type: 
Working Paper

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