Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/287874 
Year of Publication: 
2022
Citation: 
[Journal:] Bulletin of Economic Research [ISSN:] 1467-8586 [Volume:] 75 [Issue:] 1 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2022 [Pages:] 65-82
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
We consider a horizontally differentiated oligopoly and investigate the relationship between merger cost savings and network effects for the incentives of firms to merge and for the postmerger welfare outcomes. We show that it is more profitable to be an insider rather than an outsider of the merger, unless both cost savings and network effects are too low. Mergers can improve customer and total welfare provided both cost savings and network effects are high enough. We find that the possibility for network effects to lead to a Pareto improvement through merger is shown to depend on the number of outside firms.
Subjects: 
compatibility
cost savings
horizontal differentiation
horizontal merger
network effect
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article
Document Version: 
Published Version

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