Endogenous Mergers in Concentrated Markets
This paper proposes an approach for predicting the pattern of mergers when different mergers are feasible. It generalizes the traditional IO approach, employing ideas on coalition-formation from cooperative game theory. The model suggests that in concentrated markets, mergers are conductive to market structures with large industry profits, and thus points to a conflict between private and social incentives. It is shown how mergers may be undertaken in order to preempt other possible, and socially more desirable, mergers. The model also throws light on the formation of research joint ventures and tariff-jumping foreign direct investment.
|Date of creation:||15 Jul 1998|
|Date of revision:|
|Contact details of provider:|| Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden|
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- Fridolfsson, Sven-Olof & Stennek, Johan, 1999.
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Working Paper Series
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Games and Economic Behavior,
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799, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Persson, Lars, 1998. "The Auctioning of a Failing Firm," Working Paper Series 514, Research Institute of Industrial Economics.
- Joseph Farrell & Carl Shapiro, 1990. "Asset Ownership and Market Structure in Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 275-292, Summer.
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- Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
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