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Dynamic oligopoly with partial cooperation and antitrust threshold

  • Matsumoto, Akio
  • Merlone, Ugo
  • Szidarovszky, Ferenc

A general framework of partial cooperation and shareholding interlocks in oligopolies is first introduced, and then the best responses of the firms are determined. The monotonic dependence of the equilibrium industry output on the cooperation levels of the firms is proved. Conditions are given for the local asymptotic stability of the equilibrium which require sufficiently small speed of adjustments. Antitrust thresholds are then introduced into the model which may result in the loss of equilibrium or in the presence of multiple equilibria. The dynamic behavior of the associated dynamic models with adaptive output adjustments also becomes more complex: period-2 cycles may emerge and coexist with stationary states.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 73 (2010)
Issue (Month): 2 (February)
Pages: 259-272

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Handle: RePEc:eee:jeborg:v:73:y:2010:i:2:p:259-272
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  1. Reynolds, Robert J. & Snapp, Bruce R., 1986. "The competitive effects of partial equity interests and joint ventures," International Journal of Industrial Organization, Elsevier, vol. 4(2), pages 141-153, June.
  2. Ugo Merlone, 2001. "Cartelizing effects of horizontal shareholding interlocks," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 333-337.
  3. Flath, David, 1991. "When is it rational for firms to acquire silent interests in rivals?," International Journal of Industrial Organization, Elsevier, vol. 9(4), pages 573-583, December.
  4. J. E. Stiglitz, 1999. "Introduction," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 28(3), pages 249-254, November.
  5. Yasuhiro ARIKAWA & Atsushi KATO, 2004. "Cross Shareholding and Initiative Effects," Discussion papers 04017, Research Institute of Economy, Trade and Industry (RIETI).
  6. Berglof, Erik & Perotti, Enrico, 1994. "The governance structure of the Japanese financial keiretsu," Journal of Financial Economics, Elsevier, vol. 36(2), pages 259-284, October.
  7. Cyert, Richard M & DeGroot, Morris H, 1973. "An Analysis of Cooperation and Learning in a Duopoly Context," American Economic Review, American Economic Association, vol. 63(1), pages 24-37, March.
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