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Eckel, Carsten (2005): Market integration and market concentration in horizontally differentiated industries. In: Economics Bulletin, Vol. 6, No. 1

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Abstract

This paper derives the impact of market integration on equilibrium firm size and market concentration in horizontally differentiated industries. We show that market concentration (measured by the number of firms) can rise as a consequence of market integration if firms engage in RDcompetition. We also demonstrate that whether concentration occurs or not depends on the RDproduction function and on consumer preferences. This result implies that the welfare effects of market integration are not unambiguously positive.

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