Failing Firm Defense with Entry Deterrence

Fedele, Alessandro and Tognoni, Massimo (2006) Failing Firm Defense with Entry Deterrence. Bologna: Dipartimento di Scienze economiche DSE, p. 21. DOI 10.6092/unibo/amsacta/4725. In: Quaderni - Working Paper DSE (562). ISSN 2282-6483.
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Abstract

Under the principle of the Failing Firm Defense (FFD) a merger that would be blocked due to its harmful effect on competition could be nevertheless allowed when (i) the acquired firm is actually failing, (ii) there is no less anti-competitive alternative purchase, (iii) absent the merger, the assets to be acquired would exit the market. This paper focuses on potential anti-competitive effects of a myopic application of the third requirement by studying consequences of a horizontal merger on entry in a Cournot oligopoly with a failing firm. If the merger is blocked, entry occurs and consumer welfare is bigger when the industry is highly concentrated because gains due to augmented competition exceed losses due to shortage of output.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Fedele, Alessandro
Tognoni, Massimo
Keywords
Failing Firm Defense, Entry Deterrence, Consumer Surplus.
Subjects
ISSN
2282-6483
DOI
Deposit date
29 Feb 2016 11:21
Last modified
29 Feb 2016 11:21
URI

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