Does the Potential to Merge Reduce Competition?

• 成果类型: Article
• 署名作者: Hackbarth, Dirk; Taub, Bart
• 署名单位: Boston University; Centre for Economic Policy Research - UK; European Corporate Governance Institute; University of Glasgow
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4089
• 发表日期: 2022
• 页码: 5364-5383
• 关键词: competition; imperfect information; industry structure; market power; mergers

摘要

We study anticompetitive horizontal mergers in a dynamic model with noisy collusion. At each instant, firms either privately choose output levels or merge to form a monopoly, trading off the benefits of avoiding price wars against the costs of merging. The potential to merge decreases pre-merger collusion, as punishments effected by price wars are weakened. We thus extend the result of Davidson and Deneckere [Davidson C, Deneckere R (1984) Horizontal mergers and collusive behavior. Internat. J. Indust. Organ. 2(2):117-1321, who analyzed the weakening of punishments post-merger, demonstrating that pre-merger collusion is weakened, in a fully stochastic model. Thus, although anticompetitive mergers harm competition ex post, the implication is that barriers and costs of merging due to regulation should be reduced to promote competition exante.