The existing literature conclude thatmergers are often unp rofitable under Cournot competition if there is no merger synergy. W e analyze merger incentives and merger effects caused by p roduct range adjustments. W e develop a model of endogenous mergers in an oligopoly industry, w here firm s compete firstly in p roduct portfolio and then secondly in market share. It is show ed that mergersmay be p rofitable even w ithout any synergy under Cournot competition because of p roduct differentiation, and are often not p rofitablew hen non2participating firm s respond by introducing new p roducts. W e also analyze the so2called “Paradox ofM erger”. It is suggested that a moderate control policy to mergers is necessary