Abstract
This paper investigates the competitive effects of mergers involving producers of complementary goods, which are usually considered to be welfare increasing, in a setting where: (i) consumers need to purchase two components to make up a system; and (ii) there is competition between two vertically differentiated producers of one of the components whereas the second (must-have) component is monopolized. We find that the (privately profitable) merger involving the low quality producer of one component and the monopolist producer of the other component may decrease both consumers’ surplus and social welfare for parameter values such that this merger can endogenously occur.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
