On the Price Effects of Horizontal Mergers: A Theoretical Interpretation

Posted by Social Science Research Network

On the Price Effects of Horizontal Mergers: A Theoretical Interpretation Emilie Dargaud (French National Center for Scientific Research) & Carlo Reggiani (University of Manchester)

Abstract: Horizontal mergers are usually under the scrutiny of antitrust authorities due to their potential undesirable effects on prices and consumer surplus. Ex?post evidence, however, suggests that these effects do not always take place and even relevant mergers may end up having negligible price effects. The analysis of mergers in the context of non?localized spatial competition may offer a further interpretation to the ones proposed in the literature: in this framework both positive and zero price effects are possible outcomes of the merger activity.