Theoretical background for competitive merger analysis

Abstract

The aim of this paper is to provide theoretical background for the assessment of merger policies. We discuss two standard models: Cournot Oligopoly with Homogeneous Goods model and Bertrand Competition with Product Differentiation model – to derive simple method how to evaluate competitive effect of a horizontal merger. We found out a unique correspondence between change in consumer surplus and change in competitors’ profits generated by the level of efficiency created in the merger.