TY - UNPB

T1 - Cooperative merger and joint maximization under sequential entry

AU - Heywood, J S

AU - Monaco, K

AU - Rothschild, R

PY - 2003

Y1 - 2003

N2 - This paper explores the concept of cooperative merger between two of three entrants that arrive sequentially in a spatial market and practise discriminatory pricing. In this framework, in contrast to much of the theoretical literature, the so-called 'merger paradox' can be comprehensively overturned. We compare our results with those arising when one firm stategically locates two plants. Although this second problem is superficially similar to the first, the underlying behaviour and implications differ in crucial respects. The welfare consequences of all our results are demonstrated.

AB - This paper explores the concept of cooperative merger between two of three entrants that arrive sequentially in a spatial market and practise discriminatory pricing. In this framework, in contrast to much of the theoretical literature, the so-called 'merger paradox' can be comprehensively overturned. We compare our results with those arising when one firm stategically locates two plants. Although this second problem is superficially similar to the first, the underlying behaviour and implications differ in crucial respects. The welfare consequences of all our results are demonstrated.

KW - Spatial price discrimination

KW - sequential entry

KW - cooperative merger

KW - merger paradox

KW - multi-plant location

M3 - Working paper

T3 - Economics Working Paper Series

BT - Cooperative merger and joint maximization under sequential entry

PB - The Department of Economics

CY - Lancaster University

ER -