UNSPECIFIED. (2004) Merger, partial collusion and relocation. JOURNAL OF ECONOMICS-ZEITSCHRIFT FUR NATIONALOKONOMIE, 83 (3). pp. 243-265. ISSN 0931-8658

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Abstract

We set up a three-firm model of spatial competition to analyse how a merger affects the incentives for relocation, and conversely, how the possibility of relocation affects the profitability of the merger, particularly for the non-participating firm. We also consider the cases of partial collusion in either prices or locations. Under the assumption of mill pricing, we find that a merger will generally induce the merger participants to relocate, but the direction of relocation is ambiguous, and dependent on the degree of convexity in the consumers' transportation cost function. Furthermore, we identify a set of parameter values for which the free-rider effect of a merger vanishes, implying that the possibility of relocation could solve the "merger paradox".

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	JOURNAL OF ECONOMICS-ZEITSCHRIFT FUR NATIONALOKONOMIE
Publisher:	SPRINGER WIEN
ISSN:	0931-8658
Official Date:	December 2004
Volume:	83
Number:	3
Number of Pages:	23
Page Range:	pp. 243-265
Identification Number:	10.1007/s00712-004-0091-9
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/7604

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