Department   Undergraduate School  , School of Commerce
   Position   Professor
Language English
Publication Date 2014/04
Type Academic Journal
Peer Review Peer reviewed
Title "Complementing Cournot's Analysis of Complements: Unidirectional Complementarity and Mergers", Journal of Economics
Contribution Type Co-authored (other than first author)
Journal Journal of Economics
Journal TypeAnother Country
Publisher Springer
Volume, Issue, Page 111(3),pp.239-261
Author and coauthor Takanori Adachi and Takeshi Ebina
Details We study the price and welfare effects of a merger of firms producing unidirectional complements: a firm is producing a product (called an optional good) that is valuable only if it is consumed with the other product (called a base good) produced by another firm. Under the assumption that there are two types of consumers: (i) those who consume one unit of the base good only or nothing (having zero valuation of the optional good), and (ii) those who consume one unit of the composite good or nothing, we show that a merger of the two firms raises the price of the base good, resulting in lower consumer surplus for the former consumer group, if and only if the average willingness to pay in the latter consumer group is sufficiently low. This result is in sharp contrast to Cournot's (Researches into the mathematical principles of the theory of wealth, 1838) classical implication that a merger of firms producing strict complements makes all consumers strictly better off.
URL for researchmap https://researchmap.jp/ebinatakeshi2010/