Abstract:This paper examines a homogeneous-good Bertrand–Edgeworth oligopoly model to explore the role of firm size and number in pricing. We consider the price impact of merger, break up, investment, divestment, entry and exit. A merger leads to higher prices only when it increases the size of the largest seller and industry capacity is neither too big nor too small post-merger. Similarly, breaking up a firm only leads to lower prices when it concerns the biggest producer and aggregate capacity is within an intermedia… Show more
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