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Emanuele Tarantino (Mannheim) – "The Effect of Horizontal Mergers, When Firms Compete in Prices and Investments"
CREST Microeconomics Seminar :
Date: 28st November 2018
Place: Room 3001.
We study the effects of mergers when firms over differentiated products and compete in prices and investments. Since it is in principle ambiguous, we use aggregative game theory to sign the net effect of the merger. We find that only if it entailed sufficient efficiency gains, could the merger raise total investments and consumer surplus. We also prove there exist classes of models for which the results obtained with cost-reducing investments are equivalent to those with quality-enhancing investments. Finally, we show that, from the consumer welfare point of view, a R&D cooperative agreement is superior to any consumer-welfare reducing merger.
Roxana Fernandez Machado (CREST), Marie Laure Allain (CREST), and Pierre Boyer (CREST)
Food provided, no registration needed.