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| Author: | Baik, K. |
| Title: | Horizontal mergers of price-setting firms with sunk capacity costs |
| Journal: | Quarterly Journal of Economics
1995 : FALL, VOL. 35:3, p. 245-256 |
| Index terms: | PRICES FISCAL POLICY MERGERS |
| Language: | eng |
| Abstract: | The author examines the profitability of a horizontal merger and its effects on the outsiders' profits and industry prices, in a market for a homogeneous product where firms with sunk capacity costs engage in price competition. The author shows that, unlike previous studies, a merger can hurt the outsiders , the postmerger prices can be lower than the premerger prices, and a merger can reduce the joint profits of the participating firms even in a static model of price competition. |
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