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Research Institute of Industrial Economics (IFN) Working Paper Series

No 558:
Horizontal Mergers Without Synergies May Increase Consumer Welfare

Johan Stennek ()

Abstract: Markets with imperfect competition do not induce a cost-minimizing allocation of production between firms. The market's ability to rationalize production is even more limited if costs are private information to firms. Merger in such markets generate an efficiency gain associated with the pooling of information. Not only may costs be reduced, the price level and price variability may also decline and consumers may thus gain.

Keywords: Horizontal Merger; Welfare; Asymmetric Information; (follow links to similar papers)

JEL-Codes: D43; D82; G34; L10; (follow links to similar papers)

13 pages, June 4, 2001

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