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Huck, Steffen; Konrad, Kai A.; Müller, Wieland (25. April 2000): Profitable horizontal mergers: A market structureoriented view. Discussion Papers, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes
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We propose a model in which mergers exert a more pronounced effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare-improving even if costs are linear. The results help to reconcile theory with various empirical findings on mergers.