Until recently, the literature on horizontal merger had been almost exclusively concerned with two issues. The first issue, which has long historical roots, is the timing of merger activity. Of particular interest has been to understand the causes of the great merger wave. Lamoreaux [5] represents the most recent addition to this literature and provides a very good review of past work. The second issue is the welfare implications of horizontal merger of which Williamson [12] is a case in point. With the exception of Stigler [8], what had generally not been at issue in this literature was the private incentives for horizontal merger. This was true in spite of the insight provided by Stigler that the non-participants of a merger are typically made better off by a merger than are the participants. Since the firms which engage in merger reduce supply, all firms benefit from the resulting higher price but the non-merging firms benefit most because they receive a higher price without having had to reduce supply. There is then the potential for a free-rider effect in merger activity as each firm wishes it to be the other firms which merge. The first suggestion that the private incentives for horizontal merger may not only be weak but that merger may be simply unprofitable arose in a numerical example by Szidarovszky and Yakowitz [9] in which they show in a three-firm Cournot model that a merger between two firms is unprofitable. Then a study by Salant, Switzer, and Reynolds [7], hereafter S-S-R, examined this issue in considerable detail and found very weak incentives for firms to merge together unless there are considerable savings in terms of fixed costs. Using the standard linear Cournot model, S-S-R show that only merger for monopoly, or close-to-monopoly, is privately optimal when there are zero fixed costs. The basis for this surprising result is that when the merged firm reduces output below the combined level of its pre-merger supply, the non-merged firms react by expanding output. Though price goes up in response to the merger, the market share of the merged firm declines. The latter effect can dominate so that the firms are made worse off by merging. In response to this result, Perry and Porter [6] argue that the standard Cournot model is inappropriate for analyzing the incentive to merge as mergers are not well-defined. Since firms do