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Can consumer surplus decrease with merger efficiencies?
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Resumo(s)
This paper investigates the impact of mergers on consumer welfare within a Cournot model, considering mergers driven by anticipated efficiency gains and potential post-merger entry. In this framework, we demonstrate that: (i) modest efficiencies can make both merger and entry beneficial, benefiting consumers; (ii) moderate efficiencies may deter entry, harming consumers due to the merger; and (iii) significant efficiencies may discourage entry but lead to lower prices, benefiting consumers. This result, therefore, embodies an important policy implication that assessing the overall effect of a merger on consumer surplus requires evaluating merger-specific synergies alongside the likelihood of post-merger entry.
Descrição
Funding Information: Helder Vasconcelos gratefully acknowledges financial support from Fundação para a Ciência e a Tecnologia ( UID/ECO/04105/2019 ). The usual disclaimer applies. Publisher Copyright: © 2024 The Author(s)
Palavras-chave
Consumer surplus Entry Horizontal mergers Synergies Finance Economics and Econometrics