Martin Chalkley, Geoff Stewart
Abstract
This article examines the profitability of horizontal merger in an open economy with Cournot competition. We find that duopoly is a necessary, but not sufficient, condition for domestic merger to be profitable. A cross-border merger, however, can be profitable from any market structure.
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This article examines the profitability of horizontal merger in an open economy with Cournot competition. We find that duopoly is a necessary, but not sufficient, condition for domestic merger to be profitable. A cross-border merger, however, can be profitable from any market structure.
Key concepts: Cournot competition, Duopoly, Economics, Profitability index, Incentive, Competition (biology), Merger control, Microeconomics