### 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 language | English |
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Pages (from-to) | 434-447 |

Number of pages | 14 |

Journal | European Journal of Operational Research |

Volume | 137 |

Issue number | 2 |

DOIs | |

Publication status | Published - 2002 Mar 1 |

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### 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

*European Journal of Operational Research*,

*137*(2), 434-447. https://doi.org/10.1016/S0377-2217(01)00103-5

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

Research output: Contribution to journal › Article

*European Journal of Operational Research*, vol. 137, no. 2, pp. 434-447. https://doi.org/10.1016/S0377-2217(01)00103-5

}

TY - JOUR

T1 - Merger effect of two firms under network equilibrium

AU - Matsubayashi, Nobuo

AU - Umezawa, Masashi

AU - Masuda, Yasushi

AU - Nishino, Hisakazu

PY - 2002/3/1

Y1 - 2002/3/1

N2 - 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.

AB - 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.

KW - Bertrand price competition

KW - Merger effect

KW - Pricing

KW - Wardrop equilibrium

UR - http://www.scopus.com/inward/record.url?scp=0036497538&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0036497538&partnerID=8YFLogxK

U2 - 10.1016/S0377-2217(01)00103-5

DO - 10.1016/S0377-2217(01)00103-5

M3 - Article

VL - 137

SP - 434

EP - 447

JO - European Journal of Operational Research

JF - European Journal of Operational Research

SN - 0377-2217

IS - 2

ER -