In a simple horizontal merger model (e.g., Cournot competition model), after the merger, should we expect the new firm to have a higher or lower market share than the sum of the market share of each individual firms? For example, before the merger, firms A and B have 30% market share each. Should we expect the joint market share to be higher or lower than 60% after the merger? Why? Would the same conclusion hold in the airline industry?

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In a simple horizontal merger modelsuch as the Cournot competition modelthe new firm formed through ... View the full answer