Published October 28, 2022
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Report
Mergers, Entry, and Consumer Welfare
Abstract
We analyze mergers and entry in oligopoly models of differentiated-products price competition. Under logit or constant elasticity of substitution demands, entry that restores pre-merger consumer surplus renders merger unprofitable. Thus, by revealed preference, it can be appropriate to infer entry barriers in merger review. The result extends to nested and random coefficients demand systems unless the entrant is a distant competitor of the merging firms. We develop modeling frameworks to guide empirical analysis in settings where theory is not dispositive. Applying these to the T-Mobile/Sprint merger, we find the Court may have erred in treating DISH as a merger-induced entrant.
Additional Information
The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the Board research staff or by the Board of Governors. All estimates and analyses in this article based on IRI data are by the authors and not by IRI. We thank Jonathan Baker, Chris Conlon, Serafin Grundl, Louis Kaplow, Robert Majure, John Mayo, Volker Nocke, Ted Rosenbaum, Nicolas Schutz, Carl Shapiro, Charles Taragin, and numerous seminar and conference participants for helpful comments.Additional details
- Eprint ID
- 117626
- Resolver ID
- CaltechAUTHORS:20221027-210525375
- Created
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2022-10-28Created from EPrint's datestamp field
- Updated
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2022-10-28Created from EPrint's last_modified field