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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

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CiteScore 2016: 0.48

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Volume 11, Issue 1 (May 2011)


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Small Fish Become Big Fish: Mergers in Stackelberg Markets Revisited

Duarte Brito
  • 1Universidade Nova de Lisboa and CEFAGE-UE,
/ Margarida Catalão-Lopes
  • 2CEG-IST, Technical University of Lisbon,
Published Online: 2011-05-02 | DOI: https://doi.org/10.2202/1935-1682.2817


This paper analyzes, under convex costs, the price effects of mergers involving two Stackelberg followers that together become a leader and revisits the “merger paradox” and the insiders' dilemma. 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.

Keywords: mergers; Stackelberg; convex costs

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Published Online: 2011-05-02

Citation Information: The B.E. Journal of Economic Analysis & Policy, ISSN (Online) 1935-1682, DOI: https://doi.org/10.2202/1935-1682.2817.

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©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston. Copyright Clearance Center

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