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Spatial Competition and Merger

Author

Listed:
  • Higgins Richard S

    (LECG, LLC)

  • Johnson Paul A

    (LECG, LLC)

  • Sullivan John T

    (LECG, LLC)

Abstract

We consider a computational equilibrium model of spatially differentiated Bertrand competition and apply it to merger analysis. Two pricing paradigms are studied: one where firms cannot price discriminate among customers and one where firms can. The model encompasses many details that make it highly realistic. A detailed example illustrates several insights into merger analysis that are not readily apparent through traditional means. The most important of these is that merger of substitute products under Bertrand price competition need not result in a price increase.

Suggested Citation

  • Higgins Richard S & Johnson Paul A & Sullivan John T, 2004. "Spatial Competition and Merger," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-37, March.
    • Handle: RePEc:bpj:bejeap:v:topics.4:y:2004:i:1:n:3
    DOI: 10.2202/1538-0653.1223
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    Cited by:

    1. Daniel Greenfield & Jeremy A. Sandford, 2021. "Upward pricing pressure in mergers of capacity‐constrained firms," Economic Inquiry, Western Economic Association International, vol. 59(4), pages 1723-1747, October.
    2. Zhiqi Chen & Gang Li, 2018. "Horizontal Mergers In The Presence Of Capacity Constraints," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1346-1356, April.

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