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Competitive in successive markets : entry and mergers

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  • Jean J. GABSWEWICZ, Skerkilajda ZANAJ

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

  • Skerdilajda, ZANAJ

Abstract

This paper analyses successive markets where the intra-market linkage depends on the technology used to produce the final output. We investigate entry of new firms, when entry obtains by expanding the economy as well as collusive agreements between firms. We highlight the differentiated effects of entry corresponding to a constant or decreasing returns, free entry in both markets does not entail the usual tendency for the input price to adjust to its marginal cost while it does under constant returns. Then, we analyse collusive agreements by stressing the role of upstream linkage on the profitability of horizontal mergers à la Salant, Switzer and Reynolds

Suggested Citation

  • Jean J. GABSWEWICZ, Skerkilajda ZANAJ & Skerdilajda, ZANAJ, 2006. "Competitive in successive markets : entry and mergers," Discussion Papers (ECON - Département des Sciences Economiques) 2006055, Université catholique de Louvain, Département des Sciences Economiques.
  • Handle: RePEc:ctl:louvec:2006055
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2006-55.pdf
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    References listed on IDEAS

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    1. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    2. Manfred Neumann & Uli Fell & Richard Reichel*, 2005. "Successive Oligopolies, Vertical Downstream Integration and Foreclosure," Journal of Industry, Competition and Trade, Springer, vol. 5(1), pages 59-77, January.
    3. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
    4. Géarard Gaudet & Ngo Long, 1996. "Vertical Integration, Foreclosure, and profits in the Presence of Double Marginalization," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 409-432, September.
    5. Hansen, Terje & Jaskold-Gabszewicz, Jean, 1972. "Collusion of factor owners and distribution of social output," Journal of Economic Theory, Elsevier, vol. 4(1), pages 1-18, February.
    6. Ordover, Janusz A & Saloner, Garth & Salop, Steven C, 1990. "Equilibrium Vertical Foreclosure," American Economic Review, American Economic Association, vol. 80(1), pages 127-142, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Oligopoly; entry; horizontal collusion; foreclosure;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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