| Publications [#345827] of Leslie M. Marx
Journal Articles
- Loertscher, S; Marx, LM, Mix-and-match divestitures and merger harm,
Japanese Economic Review, vol. 70 no. 3
(September, 2019),
pp. 346-366 [doi]
(last updated on 2024/04/22)
Abstract: We consider the effects of a merger combined with a divestiture that mixes and matches the assets of the two pre-merger suppliers into one higher-cost and one lower-cost post-merger supplier. Such mix-and-match transactions leave the number of suppliers in a market unchanged but, as we show, can be procompetitive or anticompetitive depending on whether buyers are powerful and on the extent of outside competition. A powerful buyer can benefit from a divestiture that creates a lower-cost supplier, even if it causes the second-lowest cost to increase. In contrast, a buyer without power is always harmed by a weakening of the competitive constraint on the lowest-cost supplier.
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