A BEJEAP Topics article.

Abstract

We consider a computational equilibrium model of spatially differentiated Bertrand competition and apply it to merger analysis. Two pricing paradigms are studied: one where firms cannot price discriminate among customers and one where firms can. The model encompasses many details that make it highly realistic. A detailed example illustrates several insights into merger analysis that are not readily apparent through traditional means. The most important of these is that merger of substitute products under Bertrand price competition need not result in a price increase.

Submitted: November 3, 2003 · Accepted: February 25, 2004 · Published: March 10, 2004

Originally published in Topics in Economic Analysis & Policy.

Recommended Citation

Higgins, Richard S.; Johnson, Paul A.; and Sullivan, John T. (2004) "Spatial Competition and Merger," Topics in Economic Analysis & Policy: Vol. 4 : Iss. 1, Article 3.
Available at: http://www.bepress.com/bejeap/topics/vol4/iss1/art3