The Welfare Consequences of Mergers with Endogenous Product Choice
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Merger_paper_25Aug2018.pdf
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1.751Mb
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Final Accepted Manuscript
Publisher
WILEYCitation
Mazzeo, M. J., Seim, K., & Varela, M. (2018). The welfare consequences of mergers with endogenous product choice. The Journal of Industrial Economics, 66(4), 980-1016.Journal
JOURNAL OF INDUSTRIAL ECONOMICSRights
Copyright © 2019 The Editorial Board of The Journal of Industrial Economics and John Wiley & Sons LtdCollection Information
This item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at repository@u.library.arizona.edu.Abstract
Merger simulations focus on the price changes that result once previously independent competitors set prices jointly and other market participants respond. We consider the incentives for firms to adjust the set of offered products after a merger. Using a model of product choice and pricing, we conduct simulations of equilibrium market outcomes of a merger in a variety of scenarios. Product offering adjustments result in additional effects on profitability and consumer welfare not realized by price responses only, particularly when the merging parties offer relatively similar products pre-merger. Cost synergies may furthermore entail the pro-competitive introduction of additional products.Note
12 month embargo; published online 02 June 2019ISSN
0022-1821Version
Final accepted manuscriptae974a485f413a2113503eed53cd6c53
10.1111/joie.12190