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Merge to monopoly in a vertically differentiated market with positional effects
* : Corresponding author
We provide an alternative behavioral approach to the well-known argument that a merge to monopoly is desirable only when it is accommodated by a (supply-side) technology transfer and/or cost-reduction. When consumers are subject to positional effects, like status or envy, there are instances where a merge to monopoly may be welfare-enhancing due to a (demand-side) utility-increasing argument. Our results hold under different modes of product market competition or cost functions.
