This thesis is an extension of a recent study into the relationship between merger size and profitability. It studies a class of Cournot oligopoly with linear cost and quadratic demand. Its focus is to analyze how a mergers profitability is affected by its size and by the demand elasticity. Such results have not yet been reported in previous studies, perhaps due to the complexity of the equilibrium equation involved. It shows an increase in the demand elasticity also raises a mergers profitability. Consequently, an increase in the demand elasticity reduces merged members critical combined per-merger market share for the merger to be profit enhancing. Comparing with 80% minimum market share requirement for a profitable merger in Salant, Switzer, and Reynolds (1983), a greater market share is needed when the demand function is concave (demand is relatively inelastic), while a smaller market share may still be profitable when the demand function is convex (demand is relatively elastic). In our model, mergers are generally detrimental to public interests by increasing market price and reducing output. However, the merger will be less harmful when the goods are very inelastic.
| Identifer | oai:union.ndltd.org:USASK/oai:usask.ca:etd-06282005-145637 |
| Date | 29 June 2005 |
| Creators | Wang, Yajun |
| Contributors | Zhao, Jingang, Sari, Nazmi, Huq, M. Mobinul, Howe, Eric, Fulton, Murray E. |
| Publisher | University of Saskatchewan |
| Source Sets | University of Saskatchewan Library |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://library.usask.ca/theses/available/etd-06282005-145637/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University of Saskatchewan or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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