in press. Welfare-reducing mergers in differentiated oligopolies with free entry

Antitrust authorities regard the possibility of post-merger entry and merger-generated effi-ciencies as two factors that may counteract the negative effects of horizontal mergers. This paper shows that in differentiated oligopolies with linear demand, all entry-inducing mergers harm consumer welfare. This is because if there is entry following a merger, it implies that the merger-generated efficiencies were not sufficiently large. Mergers which induce exit, due to sufficiently high cost savings, always improve consumer welfare