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Partial coordination and mergers among quantity-setting firms

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  • Escrihuela-Villar, Marc

Abstract

We analyze horizontal mergers in a collusive environment by using an infinitely repeated game where (i) a subset of collusive firms is exogenously given and (ii) partially collusive arrangements are allowed for. We show that, in our model, there is no clear relation between the existence of mergers and full collusion at equilibrium. However, we demonstrate that the presence of mergers generally leads to a price increase. Also, we show that cartel firms have less incentives to merge than firms in a Cournot oligopoly, and that collusion increases fringe firms' incentives to merge.

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  • Escrihuela-Villar, Marc, 2008. "Partial coordination and mergers among quantity-setting firms," International Journal of Industrial Organization, Elsevier, vol. 26(3), pages 803-810, May.
    • Handle: RePEc:eee:indorg:v:26:y:2008:i:3:p:803-810
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    Citations

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    Cited by:

    1. Stefano Colombo, 2016. "Mixed oligopolies and collusion," Journal of Economics, Springer, vol. 118(2), pages 167-184, June.
    2. Roman Inderst & Frank P. Maier-Rigaud & Ulrich Schwalbe, 2014. "Umbrella Effects," Journal of Competition Law and Economics, Oxford University Press, vol. 10(3), pages 739-763.
    3. Grüb, Jens, 2019. "Mergers and partial tacit collusion," Hohenheim Discussion Papers in Business, Economics and Social Sciences 15-2019, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    4. Iwan Bos & Joseph E. Harrington, Jr, 2010. "Endogenous cartel formation with heterogeneous firms," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 92-117, March.
    5. Escrihuela-Villar Marc, 2016. "On Merger Profitability and the Intensity of Rivalry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 1203-1212, April.
    6. Trost, Michael, 2022. "Unraveling the spreading pattern of collusively effective competition clauses," Hohenheim Discussion Papers in Business, Economics and Social Sciences 01-2022, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    7. Filipa Mota & João Correia-da-Silva & Joana Pinho, 2023. "Public–Private Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(4), pages 393-417, June.
    8. Marc Escrihuela-Villar & Jorge Guillén, 2014. "On The Sustainability Of Collusion In A Differentiated Oligopoly With A Cartel And A Fringe," Bulletin of Economic Research, Wiley Blackwell, vol. 66(S1), pages 132-137, December.
    9. Marc Escrihuela-Villar & Carlos Gutiérrez-Hita, 2018. "Imperfect collusion in an asymmetric duopoly," Estudios de Economia, University of Chile, Department of Economics, vol. 45(1 Year 20), pages 29-50, June.
    10. Marc Escrihuela-Villar & Jorge Guillén, 2014. "On the Relationship Between Innovation and Product Market Competition," The Japanese Economic Review, Japanese Economic Association, vol. 65(4), pages 543-557, December.
    11. Escrihuela-Villar, Marc, 2011. "On Welfare Effects Of Horizontal Mergers With Product Differentiation," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 16(30), pages 7-12.
    12. Escrihuela-Villar Marc & Ferrarese Walter, 2019. "Horizontal Mergers in a Dynamic Cournot Market: Solving the Free Riding Issue Without Efficiency Gains," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(4), pages 1-14, October.
    13. Darong DAI & Kunrong SHEN, 2014. "Stochastic evolutionary cartel formation," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(590)), pages 7-26, January.
    14. repec:agr:journl:v:1(590):y:2014:i:1(590):p:7-26 is not listed on IDEAS
    15. Marc Escrihuela-Villar, 2013. "On merger in a collusive Stackelberg market," Economics Bulletin, AccessEcon, vol. 33(3), pages 2394-2401.
    16. Keisuke Hattori & Lin Ming Hsin, 2014. "Complementary Alliances in Composite Good Markets with Network Structure," Manchester School, University of Manchester, vol. 82(1), pages 33-51, January.
    17. Marc Escrihuela-Villar & Jorge Guillen, 2011. "On Collusion and Industry Size," Annals of Economics and Finance, Society for AEF, vol. 12(1), pages 31-40, May.
    18. Trost, Michael, 2021. "The collusive efficacy of competition clauses in Bertrand Markets with capacity-constrained retailers," Hohenheim Discussion Papers in Business, Economics and Social Sciences 04-2021, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    19. Filomena Garcia & Jose Manuel Paz y Miño & Gustavo Torrens, 2020. "The merger paradox, collusion, and competition policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 2051-2081, December.
    20. Marc Escrihuela-Villar, 2016. "On the price effects of collusion and the number of firms," Economics Bulletin, AccessEcon, vol. 36(3), pages 1694-1704.

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