Journal article
Environmental policy helping antitrust decisions: Socially excessive and insufficient merger approvals
Resource and energy economics, Vol.67, p.101267
02/2022
Abstract
•We examine firms’ incentives to merge under duopoly.•We allow for product differentiation, cost asymmetries, and pollution intensities.•We analyze mergers with and without environmental regulation.•Socially excessive mergers arise when firms shift output to the more cost-efficient firm.•Socially insufficient mergers can also arise if output shifts reduce pollution.
This paper considers firms’ incentives to merge under imperfect competition, where we allow for product differentiation, cost asymmetries, and pollution intensities (green and brown goods). We first analyze mergers in the absence of environmental regulation, showing that mergers induce an output shift towards the lowest cost firm. When emission fees are introduced, however, firms also consider their relative pollution intensities, potentially reverting the above output shift. We show that socially excessive mergers can arise when firms shift output to the more cost-efficient firm which may cause more pollution. In contrast, socially insufficient mergers can arise if output shifts reduce pollution.
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Details
- Title
- Environmental policy helping antitrust decisions
- Creators
- Pak-Sing Choi - National Central UniversityAna Espínola-Arredondo - 101B Hulbert Hall, School of Economic Sciences,Washington State University, Pullman, WA 99164-6210, USAFélix Muñoz-García - 103H Hulbert Hall, School of Economic Sciences, Washington State University, Pullman, WA 99164-6210, USA
- Publication Details
- Resource and energy economics, Vol.67, p.101267
- Academic Unit
- Economic Sciences, School of
- Publisher
- Elsevier B.V
- Identifiers
- 99900971132301842
- Language
- English
- Resource Type
- Journal article