Abstract: In this paper we use a two-stage game to model endogenous mergers. In the first stage of the game, firms decide whether, or not, to merge and, in the second stage, firms compete on the product market. Merger occurrence is determined by the interplay of the initial number of firms in the industry, the expected competitive intensity, and the possibility to economize on fixed costs through merger. It is shown that the equilibrium market structure concentration is decreasing in the first of these factors and increasing in the other two. Some implications for antitrust policy are discussed. Return to Other Abstracts Menu.