Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263299 
Year of Publication: 
2022
Series/Report no.: 
ISER Discussion Paper No. 1162
Publisher: 
Osaka University, Institute of Social and Economic Research (ISER), Osaka
Abstract: 
We consider mergers between multi-product firms in a market with monopolistically competitive fringe of single-product firms. Aggregate product variety is determined by product variety choices of multi-product firms and entry/exit decisions of single-product firms. Mergers can generate marginal cost synergies (affecting marginal cost of quantity) or fixed cost synergies (affecting marginal cost of variety). We show that with marginal cost synergies, consumer welfare decreases whenever aggregate variety increases following a merger. However, with fixed cost synergies, an increase in aggregate variety can indicate that the merger is beneficial. Our results also show high synergies do not necessarily improve consumer welfare.
Subjects: 
Antitrust policy
merger analysis
multiproduct firms
product range choice
entry
cost synergies
JEL: 
L11
L41
D43
Document Type: 
Working Paper

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