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"We've become a quality producer of high-technology goods, Dauch says.
Finally and undertaking a local analysis in the neighborhood of (tau =0), the difference in profits between proposing a (H) merger and proposing a (V) one when the proposer is the high quality producer is decreasing in quality showing that small differences in quality are making more likely the proposal of (V) mergers.
However, a (H) merger proposed by the high quality producer might increase CS when products are very differentiated and the difference in quality is large enough.23 There is a shift from low quality composite goods to high quality ones that might favor consumers despite the increase in prices.
It becomes now relevant to distinguish between the mergers proposed by the high quality producer, that is a (H) merger between (A_{1}^) and (A_{2}), or a (V) merger between (A_{1}^) and (B_{1}), from those proposed by a low quality one, for instance a (H) merger between (B_{1}) and (B_{2}), or a (V) merger between (A_{2}) and ( B_{2}).
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com