Fauli-Oller, R. and L. Bru
Economics Bulletin – 12.3 (2008) 1-7

Keywords: mergers, buyer power, profitability

Abstract: Salant et al. (1983) showed in a Cournot setting that horizontal mergers are unprofitable because outsiders react by increasing their output. We show that this negative effect may be compensated by the positive effect that horizontal mergers have on the buyer power of merging firms in input markets.