This paper studies an effect of a horizontal merger where a product consolidation by the merged firm may alter the substitutability in the industry. We show that as the number of firms in the industry increases, this type of merger becomes profitable for merging firms, while unprofitable for non-merging firms. Furthermore, we show that with a moderate level of change in the substitutability, the merger of a larger number of firms with a product consolidation is not necessarily profitable for merging firms.
|Number of pages||9|
|Publication status||Published - 2010|
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)