Horizontal Mergers:an Equilibrium Analysis on Market Price Profit and Welfare

This paper analyzes horizontal mergers in Salant Cournot oligopoly model and the effect of mergers on profits,market price and social welfare.However,different from Salant model,I do not restrict all firms to remain the Cournot strategies before and after the merger,but allow the new merged group a Stackelberg leader and the unmerged firms remain Cournot after the merger.We conclude that there are strong incentives for the merged firms to take such horizontal merger which is profitable for them,and find some conditions under which such mergers would decrease market price and raise the consumer welfare and social welfare.