Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Friday, June 10, 2011

Profitability of Horizontal Mergers in the Presence of Price Stickiness

Posted by D. Daniel Sokol

Hamideh Esfahani (University of Bologna) addresses Profitability of Horizontal Mergers in the Presence of Price Stickiness.

ABSTRACT: In this paper, we investigate the profitability of horizontal mergers of firms with price adjustments. We take a di¤erential game approach and both the open-loop as well as the closed-loop equlibria are considered. We show that the merger incentive is determined by how fast the price adapts to the equilibrium level.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/06/profitability-of-horizontal-mergers-in-the-presence-of-price-stickiness.html

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