Cournot oligopoly conditions under which any horizontal merger is profitable

Findings in economic theory suggest that horizontal mergers involving firms with aggregate market share less than 50% are unlikely to be motivated by the consequent reduction in competitivity. The results arise because, absen t cost efficiencies, quantity-setting firms in small mergers are impoverish ed by the merger. We demonstrate that this conclusion is a consequence of t he strong restrictions imposed on the demand function, and we identify a we ll-behaved demand function such that any set of merging firms benefits from the reduction in competition even when there are no cost efficiencies.