Mergers on Networks

Dubovik, Andrei (2018): Mergers on Networks.

Abstract

I study mergers where each firm owns multiple shops across a country. Presently, the European Commission views every shop, together with the shops from its catchment area, as an isolated market. Such an approach is internally inconsistent. I show how to extend the European Commission's approach to consistently take overlaps in catchment areas into account. My model is a specialization of the existing network theory that is aimed to be feasible in real merger cases. As a demonstration, I study a past merger case and I find that neglecting overlaps in catchment areas can result in substantial biases.

• Item Type: MPRA Paper
• Language: English
• Keywords: mergers, networks, spatial competition, consumer demand
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D85 - Network Formation and Analysis: Theory; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships ; Contracts and Reputation ; Networks; L - Industrial Organization > L4 - Antitrust Issues and Policies > L40 - General

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