Williamson tradeoff model

[1] The model was first presented by Oliver Williamson in his 1968 paper "Economies as an Antitrust Defense: The welfare tradeoffs" in the American Economic Review.

[2] Williamson argued that ignoring efficiencies that may result from proposed mergers in antitrust law "fail[ed] to meet the basic test of economic rationality".

[4] Suppose further that after a merger between firms in the industry takes place, unit costs fall to c2

[4] One implication of the Williamson model is that the gains from cost reduction do not have to be "large" in order to outweigh the losses that result from higher prices.

What this means is that the gains from the merger would have to be very small, or alternatively, the demand for the good in question would have to be relatively quite inelastic for social surplus to decrease.