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On the Effects of Mergers on Equilibrium Outcomes in a Common Property Renewable Asset Oligopoly

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  • Hassan Benchekroun
  • Gérard Gaudet

Abstract

This paper examines a dynamic game of exploitation of a common pool of some renewable asset by agents that sell the result of their exploitation on an oligopolistic market. A Markov Perfect Nash Equilibrium of the game is used to analyze the effects of a merger of a subset of the agents. We study the impact of the merger on the equilibrium production strategies, on the steady states, and on the profitability of the merger for its members. We show that there exists an interval of the asset’s stock such that any merger is profitable if the stock at the time the merger is formed falls within that interval. That includes mergers that are known to be unprofitable in the corresponding static equilibrium framework.

Suggested Citation

  • Hassan Benchekroun & Gérard Gaudet, 2014. "On the Effects of Mergers on Equilibrium Outcomes in a Common Property Renewable Asset Oligopoly," CESifo Working Paper Series 5074, CESifo.
    • Handle: RePEc:ces:ceswps:_5074
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Benchekroun, Hassan & Ray Chaudhuri, Amrita & Tasneem, Dina, 2020. "On the impact of trade in a common property renewable resource oligopoly," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    2. Colombo, Luca & Labrecciosa, Paola, 2019. "Stackelberg versus Cournot: A differential game approach," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 239-261.
    3. Michele Bisceglia, 2020. "Optimal taxation in a common resource oligopoly game," Journal of Economics, Springer, vol. 129(1), pages 1-31, January.
    4. Benchekroun, Hassan & Breton, Michèle & Chaudhuri, Amrita Ray, 2019. "Mergers in nonrenewable resource oligopolies and environmental policies," European Economic Review, Elsevier, vol. 111(C), pages 35-52.
    5. Colombo, Luca & Labrecciosa, Paola, 2018. "Consumer surplus-enhancing cooperation in a natural resource oligopoly," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 185-193.
    6. Nie, Pu-yan & Wang, Chan & Wen, Hong-xing, 2021. "Horizontal mergers under uniform resource constraints," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    7. Benchekroun, Hassan & Gaudet, Gérard, 2015. "On the effects of mergers on equilibrium outcomes in a common property renewable asset oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 209-223.
    8. Colombo, Luca & Labrecciosa, Paola, 2022. "Product quality differentiation in a renewable resource oligopoly," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    9. N. Baris Vardar & Georges Zaccour, 2020. "Exploitation of a Productive Asset in the Presence of Strategic Behavior and Pollution Externalities," Mathematics, MDPI, vol. 8(10), pages 1-28, October.

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    More about this item

    Keywords

    mergers; dynamic games; oligopoly; common property; renewable resources;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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