Endogenous mergers and maximal concentration: a note

This article examines the incentive to merge in a Bertrand competition model with generalized substitutability and price competition. The model suggests that acquisition of firms by their rivals can result in maximal concentration of the industry.endogenous mergers, concentration, price competition

Active firms in horizontal mergers and cartel stability

In this paper, we study the optimal number of active firms in acoalition and in a merger. We consider two kinds of game : a merger gameand a coalition game, both in the context of price competition with horizontalproduct differentiation. These are two-stage games. The first stage consistsof determining the number of active firms; the second stage is price competitionbetween active firms. Firms belonging to the same owner or to thesame coalition play cooperatively between themselves but face competitionbetween other firms.We show that when there is no competitive pressure (i.e. no outside firm)then only merged equilibria can occur in the merger case. In the coalitioncase we obtain a similar result in which the number of active firms in thesecond stage is less than the initial number of firms.Moreover we show that if competitive pressure is high enough then theinitial number of firms in the industry is the same as the number of activefirms in the last stage for each kind of game.Mergers ; Coalitions ; Product differentiation

Monopolization through acquisitions in a differentiated product industry

This article analyzes the incentive to merge in a context of price competition with horizontal product differentiation. In contrast to the results obtained by Kamien and Zang (1990), we show that merged equilibria can appear in this game. Moreover monopolization of the industry occurs with a high number of firms.cooperative game; mergers; oligopoly

Mergers, cartels and leniency programs : the role of production capacities

In this paper, we study the impact of a merger on collusion depending on the endowment of capital asset among firms. We show that the merger makes the collusion easier to sustain when asymmetric capital stock combines with less efficient insiders because of more symmetric conditions and closer incentive constraints. Moreover, this model allows us to determinean optimal threshold of asymmetry among insiders and outsiders such as a merger has pro-competitive effects and we compare this value with the value which would restore perfect symmetry between firms after the merger.mergers ; collusion ; leniency programs

Horizontal Mergers in the Spokes Model

The theoretical analysis of merger poses a number of paradoxes. If firms compete in prices, a merger is profitable for all parties involved. Outsiders, however, free-ride and earn higher profits than insiders. The "spokes model" is a recently introduced framework to study n-firms spatial competition. This paper shows that in this model free-riding does not necessarily take place.horizontal mergers, spokes model, mergers paradoxes.

Active firms in horizontal mergers and cartel stability

International audienceIn this paper, we study the optimal number of active firms in acoalition and in a merger. We consider two kinds of game : a merger gameand a coalition game, both in the context of price competition with horizontalproduct differentiation. These are two-stage games. The first stage consistsof determining the number of active firms; the second stage is price competitionbetween active firms. Firms belonging to the same owner or to thesame coalition play cooperatively between themselves but face competitionbetween other firms.We show that when there is no competitive pressure (i.e. no outside firm)then only merged equilibria can occur in the merger case. In the coalitioncase we obtain a similar result in which the number of active firms in thesecond stage is less than the initial number of firms.Moreover we show that if competitive pressure is high enough then theinitial number of firms in the industry is the same as the number of activefirms in the last stage for each kind of game

Mergers, cartels and leniency programs : the role of production capacities

Working paper GATE 08-14In this paper, we study the impact of a merger on collusion depending on the endowment of capital asset among firms. We show that the merger makes the collusion easier to sustain when asymmetric capital stock combines with less efficient insiders because of more symmetric conditions and closer incentive constraints. Moreover, this model allows us to determinean optimal threshold of asymmetry among insiders and outsiders such as a merger has pro-competitive effects and we compare this value with the value which would restore perfect symmetry between firms after the merger

Monopolization through acquisitions in a differentiated product industry

Working Paper du GATE 2005-07This article analyzes the incentive to merge in a context of price competition with horizontal product differentiation. In contrast to the results obtained by Kamien and Zang (1990), we show that merged equilibria can appear in this game. Moreover monopolization of the industry occurs with a high number of firms