Work

An Aggregative Games Approach to Merger Analysis in Multiproduct‐Firm Oligopoly

Year: 2025

Type: article

Abstract: ABSTRACT Using an aggregative games approach, we analyze horizontal mergers in a model of multiproduct‐firm price competition with CES and logit demand, allowing for arbitrary firm and product heterogeneity. We provide conditions under which a merger raises consumer surplus, and establish the dynamic optimality of a myopic, consumer‐surplus‐based merger approval policy. We also study the aggregate surplus and external effects of a merger. Finally, we show that the market power effect of a merger, defined as the welfare effect in the absence of merger‐specific synergies, can be approximated by the induced, naively computed change in the Herfindahl index.

Source: The RAND Journal of Economics

DOI: 10.1111/1756-2171.12500

Authors: Volker Nocke, Nicolas Schutz

Institutions: University of California, Los Angeles, University of Mannheim

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,400

Funders: U.S. Department of Justice, Ohio State University, Northwestern University, Deutsche Forschungsgemeinschaft