IDEAS home Printed from https://ideas.repec.org/p/phs/dpaper/201505.html
   My bibliography  Save this paper

N-Poly Viability and Conglopolistic Competition in Small Emerging Market

Author

Listed:
  • Raul V. Fabella

    (School of Economics, University of the Philippines Diliman)

Abstract

The economic catch-up of the East Asian region went hand-in-hand with the emergence and even dominance of large quasi-state or private conglomerates. Such for example were the Zaibatsus in the pre-WWII and the Keiretsus of the post-WWII Japan and the Chaebols of South Korea which enjoyed extensive state sponsorship and the Taipan-led business empires of South and South East Asia which were largely autonomic. The trend continues to this day especially in the People’s Republic of China. This dominance was not just an accidental fixture but the natural result of the economic and social environments prevalent in emerging markets. After reviewing the literature on why a few large private conglomerates tended to dominate the landscape of less developed economies in a rapid catch-up mode, we attempt a game theoretic account for the spread of these firms across different markets. We first define the concept of “n-poly viability” or the number of firms that can profitably Cournot compete in a market of a given the size and fixed capital requirement. We then show that conglopolistic competition (conglomerates competing in many markets) is a subgame perfect equilibrium of an entry game among initial monopolists and that this evolution is consumer welfare-improving. We identify the conditions under which only one firm or no firm benefits from the evolution.

Suggested Citation

  • Raul V. Fabella, 2015. "N-Poly Viability and Conglopolistic Competition in Small Emerging Market," UP School of Economics Discussion Papers 201505, University of the Philippines School of Economics.
  • Handle: RePEc:phs:dpaper:201505
    as

    Download full text from publisher

    File URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1473
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
    2. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-293, June.
    3. Neumann, Manfred & Weigand, Jurgen & Gross, Alexandra & Munter, Markus Thomas, 2001. "Market size, fixed costs and horizontal concentration," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 823-840, April.
    4. Asplund, Marcus & Sandin, Rickard, 1999. "The Number of Firms and Production Capacity in Relation to Market Size," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 69-85, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    behavioral; polymorphism; Bayesian; cooperation; groups;

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:phs:dpaper:201505. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reuben T. Campos). General contact details of provider: http://edirc.repec.org/data/seupdph.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.