The Profitability of Small Horizontal Mergers with Nonlinear Demand Functions

We want to take a differential game approach with price dynamics to conduct an investigation into the consequences of horizontal merger of firms where the demand function is nonlinear. We take into consideration the open-loop equilibrium. We show that in relation to the fact that the demand is nonlinear and prices follow some stickiness an incentive for small merger exists, while it does not appear under the standard approach using a linear demand function.

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Year of publication:	2011
Authors:	Esfahani, Hamideh ; Lambertini, Luca
Publisher:	Bologna : Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)

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Series:	Quaderni - Working Paper DSE ; 728
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	10.6092/unibo/amsacta/4513 [DOI] 1000748545 [GVK] hdl:10419/159569 [Handle] RePEc:bol:bodewp:WP728 [RePEc]
Classification:	C73 - Stochastic and Dynamic Games ; D43 - Oligopoly and Other Forms of Market Imperfection ; G34 - Mergers; Acquisitions; Restructuring; Corporate Governance ; L13 - Oligopoly and Other Imperfect Markets
Source:	EconStor

Persistent link: https://www.econbiz.de/10011651622