Mix-and-match divestitures and merger harm

Journal Article (Journal Article)

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.

Full Text

Duke Authors

Cited Authors

  • Loertscher, S; Marx, LM

Published Date

  • September 1, 2019

Published In

Volume / Issue

  • 70 / 3

Start / End Page

  • 346 - 366

Electronic International Standard Serial Number (EISSN)

  • 1468-5876

International Standard Serial Number (ISSN)

  • 1352-4739

Digital Object Identifier (DOI)

  • 10.1111/jere.12237

Citation Source

  • Scopus