Merger to monopoly in a vertically differentiated duopoly with positional effects

Abstract

Abstract We provide an alternative behavioral approach to the well-known argument that a merger to monopoly is desirable only when it is accommodated by a (supply-side) technology transfer and cost reduction. When consumers are subject to positional effects, like status or envy, there are instances where a merger to monopoly may be welfare-enhancing due to a (demand-side) utility-increasing argument. JEL Classification: L11; D11; D42.