A BEJEAP Topics article.

Abstract

In imperfectly competitive markets firms with high costs produce positive output. The market's ability to minimize costs is also constrained by the fact that firms' costs are often private information. Mergers in such markets play a dual role. They reduce competition but they also generate an efficiency gain associated with the pooling of information. This paper shows that not only may costs be reduced as a result of merger, the price level may also decline and consumers may thus gain.

Submitted: August 1, 2002 · Accepted: January 9, 2003 · Published: January 29, 2003

Originally published in Topics in Economic Analysis & Policy.

Recommended Citation

Stennek, Johan (2003) "Horizontal Mergers Without Synergies May Increase Consumer Welfare," Topics in Economic Analysis & Policy: Vol. 3 : Iss. 1, Article 2.
Available at: http://www.bepress.com/bejeap/topics/vol3/iss1/art2