Mergers, cartels and leniency programs: The role of capital stocks
AbstractThis paper examines the impact of mergers on collusion, depending on the endowment of capital assets among firms. We show that mergers render collusion easier to sustain when an asymmetric capital stock is combined with less-efficient insiders, due to more symmetric conditions and tighter incentive constraints. Moreover, the model allows us to determine an optimal threshold of asymmetry between insiders and outsiders such that mergers have pro-competitive effects; we compare this value with that which would generate perfect symmetry between firms after the merger.
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Bibliographic InfoArticle provided by Elsevier in its journal Research in Economics.
Volume (Year): 64 (2010)
Issue (Month): 1 (March)
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Web page: http://www.elsevier.com/locate/inca/622941
Mergers Collusion Leniency programs;
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- Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-27, March.
- Lars-Hendrik R�ller & Frode Steen, 2006. "On the Workings of a Cartel: Evidence from the Norwegian Cement Industry," American Economic Review, American Economic Association, vol. 96(1), pages 321-338, March.
- Motta, M. & Polo, M., 1999.
"Leniency Programs and Cartel Prosecution,"
Economics Working Papers
eco99/23, European University Institute.
- Motta, Massimo & Polo, Michele, 2000. "Leniency Programs and Cartel Prosecution," CEPR Discussion Papers 2349, C.E.P.R. Discussion Papers.
- Massimo Motta & Michele Polo, . "Leniency Programs and Cartel Prosecution," Working Papers 150, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Rothschild, R., 1999. "Cartel stability when costs are heterogeneous," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 717-734, July.
- Thierry PENARD, 1997. "Choix de capacités et comportements stratégiques," Annales d'Economie et de Statistique, ENSAE, issue 46, pages 203-224.
- McAfee, R Preston & Williams, Michael A, 1992. "Horizontal Mergers and Antitrust Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 181-87, June.
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