"Small fish become big fish: merger in Stackelberg markets revisited"

Duarte Brito & Margarida Catalão-Lopes. This paper analyzes, under convex costs, the price effects of mergers involving two Stackelber followers that become a leader, and revisits the "merger paradox".
Resumo WP nº 40:
 
This paper analyzes, under convex costs, the price effects of mergers involving two Stackelber followers that become a leader, and revisits the "merger paradox". Contrary to what might be expected, prices are more likely to increase with cost convexity than with linear costs. Also, the incentive to free ride may reappear.

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