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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98-1, Brown University, Department of Economics, revised Jan 1998.
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799, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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"Endogenous mergers in concentrated markets,"
International Journal of Industrial Organization,
Elsevier, vol. 19(8), pages 1213-1244, September.
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- Fridolfsson, Sven-Olof & Stennek, Johan, 2000.
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CEPR Discussion Papers
2357, C.E.P.R. Discussion Papers.
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30/1995, Oslo University, Department of Economics.
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- Morton I. Kamien & Israel Zang, 1990. "The Limits of Monopolization Through Acquisition," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 465-499.
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