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Horizontal Mergers Without Synergies May Increase Consumer Welfare

Author

Listed:
  • Stennek, Johan

    (The Research Institute of Industrial Economics)

Abstract

Markets with imperfect competition do not induce a cost-minimizing allocation of production between firms. The market's ability to rationalize production is even more limited if costs are private information to firms. Merger in such markets generate an efficiency gain associated with the pooling of information. Not only may costs be reduced, the price level and price variability may also decline and consumers may thus gain.

Suggested Citation

  • Stennek, Johan, 2001. "Horizontal Mergers Without Synergies May Increase Consumer Welfare," Working Paper Series 558, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0558
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    More about this item

    Keywords

    Horizontal Merger; Welfare; Asymmetric Information;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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