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Spatial Price Discrimination and Merger: The N‐Firm Case

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  • John S. Heywood
  • Kristen Monaco
  • R. Rothschild

Abstract

The consequences of merger are analyzed in an N‐firm model of spatial price discrimination. The merger occurs with known probability after location decisions have been made. The possibility of merger alters locations, generates inefficiency, and increases the profit of the merging firms. In the case of corner mergers, but never in the case of interior mergers, the possibility of merger may also reduce the profit of the excluded firms.

Suggested Citation

  • John S. Heywood & Kristen Monaco & R. Rothschild, 2001. "Spatial Price Discrimination and Merger: The N‐Firm Case," Southern Economic Journal, John Wiley & Sons, vol. 67(3), pages 672-684, January.
    • Handle: RePEc:wly:soecon:v:67:y:2001:i:3:p:672-684
    DOI: 10.1002/j.2325-8012.2001.tb00362.x
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    References listed on IDEAS

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    1. SCHMALENSEE, Richard & THISSE, Jacques-François, 1988. "Perceptual maps and the optimal location of new products: an integrative essay," LIDAM Reprints CORE 840, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    5. James D. Reitzes & David T. Levy, 1995. "Price Discrimination and Mergers," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 427-436, May.
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