Date of Award
8-21-2013
Degree Type
Thesis
Degree Name
Master of Philosophy (MPHIL)
Department
Economics
First Advisor
Prof. Ping LIN
Second Advisor
Dr. Liangliang JIANG
Abstract
Building an asymmetric differentiated goods quantity competition model, the present paper explores how substitutability of products, one of the factors affecting the unilateral effect, determines horizontal mergers and acquisitions equilibrium and strategies. It seems intuitively obvious that the merger between firms with goods that are sufficiently close substitutes can be more profitable. However, this thesis's counter-intuitive results show that, for some parameter values, a merger is more profitable for the merging firm when the target firm produces a distant substitutes (i.e., when it is not the closest competitor to the acquiring firm in the market).The theoretical analysis shows that to merge with firm with low substitute parameter is more profitable provided that target firms are close enough and the both of them are distant enough from merging firms. The results in Cournot model and Bertrand have some similarities, for example, they both harm to consumer surplus and the optimal strategy harms most. For the difference, for example, in Coumot model, whenever it is profitable to merge with a distant competitor, it is the optimal strategy, while in Bertrand model, it depends. The paper also extends the classical "horizontal merger paradox" to a setting of asymmetric differentiated oligopoly.
Keywords
asymmetric oligopoly, horizontal merger, merger paradox
Copyright
The copyright of this thesis is owned by its author. Any reproduction, adaptation, distribution or dissemination of this thesis without express authorization is strictly prohibited.
Recommended Citation
Lu, J. (2013). Equilibrium and strategies of horizontal mergers inasymmetric differentiated oligopoly (Master's thesis). Retrieved from http://dx.doi.org/10.14793/econ_etd.26