The Informational Advantages or Disadvantages of Horizontal Mergers.

The author's goal is to predict whether horizontal mergers can gene rate informational advantages to firms facing a stochastic market. At the Cournot equilibrium, each nonmerging firm benefits from an informational advantage that exceeds the informational advantage (if it exists) of each merging firm. More over, if signals are highly correlated compared with the precision of private signals, and if the number of colluding firms is small relative to the whole market, an informational disadvantage is impose d on each firm that colludes. At the Bertrand equilibrium, the informational advantage of each merging firm exceeds the informational advantage of each nonmerging firm, and the latter is positive. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.