On the Price Effects of Horizontal Mergers: A Theoretical Interpretation

Abstract

Horizontal mergers are usually under the scrutiny of antitrust authorities due to their potential undesirable effects on prices and consumer surplus. Ex-post evidence, however, suggests that not always these effects take place and even relevant mergers may end up having negligible price effects. The analysis of mergers in the context of non-localized spatial competition may offer a further interpretation to the ones proposed in the literature: in this framework both positive and zero price effects are possible outcomes of the merger activity.

Keywords: horizontal mergers, price effects, spokes model

JEL Classification: D43, L11, L13