Merger in the Round: Anticompetitive Effects of Mergers in Markets with Localized Competition

Authors:
David T. Levy and James D. Reitzes
Working Paper:
177

This paper examines the incentives for merger and collusion in a market where firms offer differentiated products and serve specific customer segments. The nature of interaction among firms largely determines the choice of a partner for merger, and Bertrand, Stackelberg, and collusive cases are investigated. In comparison to other types of markets (i. e., those characterized by homogeneous products or homogeneous consumers), this paper shows that collusion may be relatively easier to achieve in markets with spatial competition. These findings are related to the approach recommend in the Merger Guidelines of the Department of Justice.