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Monopolisation of triopoly – revisited


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  • Jacek Prokop


The main objective of this paper is to provide a new insight into the possibility of monopolising a three-firm industry through acquisition of rivals in the absence of restrictions imposed by the antitrust authorities. The dynamic model of monopolisation under Cournot-type rivalry among oligopolists implies that the monopolisation through acquisition is not profitable because of the free riding among the owners of firms. However, in a model of triopoly where the acquirer could become the market leader of the Stackelberg type, we show that a single buyer can monopolise an industry through acquisition of rivals. It means that the monopolisation of triopoly may not be prevented by the market alone. This finding has an important regulatory implication different from the results of the previous models: an active intervention of antitrust authorities in the market with only three firms is necessary to block mergers and acquisitions.

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Bibliographic Info

Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Computational Economics and Econometrics.

Volume (Year): 1 (2009)
Issue (Month): 2 ()
Pages: 113-125

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Handle: RePEc:ids:ijcome:v:1:y:2009:i:2:p:113-125

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Keywords: triopoly monopolisation; mergers; acquisitions; free riding; antitrust policy; computational economics; dynamic modelling; rivalry; regulations.;


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  1. Morton I. Kamien & Israel Zang, 1988. "The Limits of Monopolization Through Acquisition," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 802, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. David Hennessy, 2000. "Cournot Oligopoly Conditions under which Any Horizontal Merger Is Profitable," Review of Industrial Organization, Springer, Springer, vol. 17(3), pages 277-284, November.
  3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262200716, December.
  4. Kamien, Morton I & Zang, Israel, 1993. "Monopolization by Sequential Acquisition," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 9(2), pages 205-29, October.
  5. Prokop, Jacek, 2005. "Monopolization through acquisition," MPRA Paper 43683, University Library of Munich, Germany, revised 2006.
  6. Harris, Ellie G, 1994. "Why One Firm Is the Target and the Other the Bidder in Single-Bidder, Synergistic Takeovers," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 67(2), pages 263-80, April.
  7. Mihkel M. Tombak, 2002. "Mergers to Monopoly," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 11(3), pages 513-546, 09.
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