Bertrand competition with capacity constraints: mergers among parking lots |
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| Institution: | 1. Division of Pediatric Surgery, Department of Surgery, Taipei Veterans General Hospital, Taipei, Taiwan;2. Division of Cardiovascular Surgery, Department of Surgery, Taipei Veterans General Hospital, Taipei, Taiwan;3. Department of Pediatrics, Taipei Veterans General Hospital, Taipei, Taiwan;4. Department of Pediatrics, China Medical University Children''s Hospital, Taichung, Taiwan;5. School of Medicine National Yang-Ming University, Taipei, Taiwan;1. Department of Economic Theory, University of Basel, Switzerland;2. Wang Yanan Institute for Studies in Economics and the School of Economics, Xiamen University, China |
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| Abstract: | To analyze the effects of mergers among firms facing capacity constraints, we develop a numerical model of price-setting behavior among multi-product firms differentiated by location and capacity. We perform a number of computational experiments designed to inform merger policy, with specific reference to the Central Parking–Allright merger of 1999. The experiments show that capacity constraints on merging firms attenuate merger effects by much more than capacity constraints on non-merging firms amplify them. The experiments also highlight the dependence of merger welfare effects on parking demand. In preparation for further industry consolidation, we propose estimators of parking demand to more precisely estimate the costs and benefits of future mergers. |
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