Multiproduct Mergers and Quality Competition

Abstract

We investigate mergers in markets where quality dierences between products are central and rms may reposition their product lines by adding or removing products of dierent qualities following a merger. Such mergers are ma- terially dierent from those studied in the existing literature. Mergers without synergies may exhibit a product-mix eect which raises consumer surplus, but only when the pre-merger industry structure satises certain observable features. Post- merger synergies may lower consumer surplus. The level of, and changes in, the Herndahl-Hirschman Index may give a misleading assessment of how a merger aects consumers. A merger may benet some outsiders but harm others.

Replaced by

Justin Pappas Johnson, and Andrew Rhodes, “Multiproduct mergers and quality competition”, The RAND Journal of Economics, vol. 52, n. 3, September 2021, pp. 633–661.

Reference

Justin Pappas Johnson, and Andrew Rhodes, “Multiproduct Mergers and Quality Competition”, TSE Working Paper, n. 18-967, November 2018, revised February 2021.