Merger effect of two firms under network equilibrium

Nobuo Matsubayashi, Masashi Umezawa, Yasushi Masuda, Hisakazu Nishino

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This paper studies the merger effect of two firms under the price competition of n firms, represented by n nodes on a linear network equilibrium model. The difference of profits between pre- and post-merger of the two firms can be described explicitly in terms of the substitution matrix. In general, the evaluation of the merger effect requires the knowledge of the substitution effects among all n nodes. For some interesting special cases, however, we obtain simple qualitative results. Specifically, the profitability of the merger can be predicted from the substitution effect of the two firms. Numerical examples exhibit the usefulness of our results.

Original languageEnglish
Pages (from-to)434-447
Number of pages14
JournalEuropean Journal of Operational Research
Volume137
Issue number2
DOIs
Publication statusPublished - 2002 Mar 1

Fingerprint

Network Equilibrium
Mergers
merger
Substitution reactions
firm
substitution
Profitability
Substitution
Linear networks
Equilibrium Model
equilibrium model
Vertex of a graph
profitability
Network Model
Profit
profit
Business
Network equilibrium
Numerical Examples
Evaluation

Keywords

  • Bertrand price competition
  • Merger effect
  • Pricing
  • Wardrop equilibrium

ASJC Scopus subject areas

  • Information Systems and Management
  • Management Science and Operations Research
  • Statistics, Probability and Uncertainty
  • Applied Mathematics
  • Modelling and Simulation
  • Transportation

Cite this

Merger effect of two firms under network equilibrium. / Matsubayashi, Nobuo; Umezawa, Masashi; Masuda, Yasushi; Nishino, Hisakazu.

In: European Journal of Operational Research, Vol. 137, No. 2, 01.03.2002, p. 434-447.

Research output: Contribution to journalArticle

Matsubayashi, Nobuo ; Umezawa, Masashi ; Masuda, Yasushi ; Nishino, Hisakazu. / Merger effect of two firms under network equilibrium. In: European Journal of Operational Research. 2002 ; Vol. 137, No. 2. pp. 434-447.
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