Tuesday, June 23, 2015
Lijun Pan, Nagoya University discusses Horizontal Merger of Big Firms with Product Choice in the Presence of Small Firms.
ABSTRACT: We extend Shimomura and Thisse (2012) to investigate how the bilateral merger between big firms with the choice on product range affects the competitive fringe and social welfare. The comparison of the marginal cost synergy to fixed cost determines whether the merged big firm (insider) withdraws a brand or maintains two brands. In addition, the insider's different product choices generate opposing impacts on the competitive fringe and social welfare.