Horizontal merger: Pivotal buyers and bargaining power

Under the assumption of a symmetric Nash equilibrium, Raskovich [Raskovich, A., 2003. Pivotal Buyers and Bargaining Position. Journal of Industrial Economics 51, 405-426.] suggests that becoming “pivotal” via merger worsens a merging buyer's bargaining position. We generalize the pivotal buyer model to allow for an asymmetric division of the surplus among firms. We show that a merging buyer's bargaining position increases post-merger if a bargaining power effect dominates a pivotal buyer effect. This result may be of interest to antitrust and regulatory agencies.