IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/32630.html
   My bibliography  Save this paper

How Merger Synergies Can Harm Consumers: A Defense of the Efficiencies Offense

Author

Listed:
  • Paulo Ramos
  • Thomas G. Wollmann

Abstract

This paper uses an aggregative games framework to predict consumer welfare when market structure is endogenously determined. Our main results characterize mergers whose synergies reduce consumer welfare by inducing rivals to exit. The conditions under which such mergers arise are broad, regardless of whether we consider quantity competition among homogeneous products or price competition among multi-product firms facing multinomial logit demand. Calibrated models based on commonly used parameter values indicate that the synergies required to avoid consumer harm can be much higher than those implied by traditional merger analysis. Neither subsequent entry nor follow-on mergers necessarily mitigate the problem.

Suggested Citation

  • Paulo Ramos & Thomas G. Wollmann, 2024. "How Merger Synergies Can Harm Consumers: A Defense of the Efficiencies Offense," NBER Working Papers 32630, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32630
    Note: IO LE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w32630.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:32630. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.