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Horizontal mergers for buyer power

By Ramon Fauli-Oller and Lluis Bru


Salant et al. (1983) showed in a Cournot setting that horizontal mergers are unprofitable because outsiders react by increasing their output. We show that this negative effect may be compensated by the positive effect that horizontal mergers have on the buyer power of merging firms in input markets.

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  3. (1983). Losses from horizontal mergers: The effects of an exogenous change in industry structure on a Cournot-Nash Equilibrium".
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