A Note on the Desirability of Merger among Complements

Abstract

This paper examines the effects of the merger of firms producing complementary components on the quality choice. We extend the model of Economides 1999 to considerably general situations about the quality function, utility function, and distribution function of consumers, and establish the results that a complementary merger provides products of higher quality, and achieves higher market coverage, higher profits and higher consumer surplus than independent ownership.