International Game Theory Review – 4.4 (2002) 449-458

Keywords: welfare, mergers, elasticity

Abstract: In a symmetric setting with constant marginal costs, the welfare loss from mergers depends on the aggregate response of non-participating firms. This response in turn depends on the degree of concavity of the demand. As the degree of concavity of demand is not observable, we obtain conditions that guarantee that the premerger elasticity of demand can be used for antitrust purposes.