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Merger and collusion in contests

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  • Huck, S.
  • Konrad, K.A.
  • Müller, W.

    (Tilburg University)

Abstract

Competition in some product markets takes the form of a contest. If some firms cooperate in such markets, they must decide how to allocate effort on each of their products and whether to reduce the number of their products in the competition. We show how this decision depends on the convexity properties of the contest success function, and we characterize conditions under which cooperation is profitable. -- In vielen Gütermärkten erfolgt der Wettbewerb zwischen Unternehmen nicht primär über Preise und Mengen, sondern über Verkaufsanstrengungen. Ein Beispiel hierfür ist der Kampf um Marktanteile und Kunden in Märkten mit hohen Werbeaufwendungen. Wenn Unternehmen in solchen Märkten kooperieren, müssen sie entscheiden, ob sie ihre gesamte Produktpalette beibehalten und ihre Verkaufsanstrengungen auf alle Produkte verteilen („Kollusion“) oder ob sie die Anzahl ihrer Produkte reduzieren („Fusion“). Wir zeigen, daß diese Entscheidung von den Konvexitätseigenschaften der Funktion abhängt, die den Markterfolg eines Produkts in Abhängigkeit von den Verkaufsanstrengungen für dieses Produkt bzw. für die Konkurrenzprodukte bestimmt, und untersuchen die Bedingungen, in denen Kooperation in Form von „Kollusion“ oder „Fusion“ für die kooperierenden Unternehmen profitabel ist.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-112517.

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Date of creation: 2002
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Publication status: Published in Journal of Institutional and Theoretical Economics (2002) v.158, p.563-575
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-112517

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Web page: http://www.tilburguniversity.edu/

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References

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Citations

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Cited by:
  1. Matthias Kräkel & Dirk Sliwka, 2002. "Strategic Delegation and Mergers in Oligopolistic Contests," Bonn Econ Discussion Papers bgse2_2002, University of Bonn, Germany.
  2. Onderstal, A.M., 2002. "Socially Optimal Mechanisms," Discussion Paper 2002-34, Tilburg University, Center for Economic Research.
  3. Steffen Huck & Kai A. Konrad & Wieland Müller, 2005. "Merger without Cost Advantages," CESifo Working Paper Series 1461, CESifo Group Munich.
  4. Clark, Derek J. & Foros, Øystein & Sand, Jan Yngve, 2009. "Foreclosure in contests," Discussion Papers 2008/27, Department of Business and Management Science, Norwegian School of Economics.
  5. Konrad, Kai A., 2007. "Strategy in contests: an introduction," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
  6. Martin Grossmann & Helmut Dietl, 2012. "Asymmetric contests with liquidity constraints," Public Choice, Springer, vol. 150(3), pages 691-713, March.

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