Unilateral versus coordinated effects:comparing the impact on consumer welfare of alternative merger outcomes


The nature of tacitly collusive behaviour often makes coordination unstable, and this may result in periods of breakdown, during which consumers benet from reduced prices. This is allowed for by adding demand uncertainty to the Compte et al. (2002) model of tacit collusion amongst asymmetric rms. Breakdowns occur when a rm cannot exclude the possibility of a deviation by a rival. It is then possible that an outcome with collusive behaviour, subject to long/frequent break downs, can improve consumer welfare compared to an alternative with sustained unilateral conduct. This is illustrated by re-examining the Nestle/Perrier merger analyzed by Compte et al., but now also taking into account the potential for welfare losses arising from unilateral behaviour.

Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
Event Title: 8th international industrial organization conference
Event Type: Other
Event Dates: 2010-05-14 - 2010-05-16
Uncontrolled Keywords: tacit collusion,collective dominance,coordinated effects,unilateral effects,merger policy
Last Modified: 11 Apr 2024 07:31
Date Deposited: 13 Feb 2013 11:51
Full Text Link: https://editori ... 10&paper_id=209
Related URLs:
PURE Output Type: Paper
Published Date: 2010-10
Authors: Olczak, Matthew (ORCID Profile 0000-0001-6808-3832)



Version: Accepted Version

Export / Share Citation


Additional statistics for this record