University of Cambridge > Talks.cam > Economics & Policy Seminars, CJBS > AN AGGREGATIVE GAMES APPROACH TO MERGER ANALYSIS IN MULTIPRODUCT FIRM OLIGOPOLY

AN AGGREGATIVE GAMES APPROACH TO MERGER ANALYSIS IN MULTIPRODUCT FIRM OLIGOPOLY

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Prior to the seminar, a light lunch will be available in the S3 Boardroom from 12:00

Using an aggregative games approach, we analyse horizontal mergers in a model of multiproduct firm price competition with nested CES or nested logit demands. We show that the Herfindahl index provides an adequate measure of the oligopoly distortions to consumer surplus and aggregate surplus, and that the induced change in the naively computed Herfindahl index is a good approximation for the market power effect of a merger. We also provide conditions under which a merger raises consumer surplus, and conditions under which a myopic, consumer surplus based merger approval policy is dynamically optimal. Finally, we study the aggregate surplus and external effects of a merger.

This talk is part of the Economics & Policy Seminars, CJBS series.

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