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Incentives to merge in asymmetric mixed oligopoly

Author

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  • Sylvain Kadohognon Ouattara

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique, Institut Supérieur de Commerce et d'Administration des Entreprises, Casablanca, Morocco)

Abstract

This paper analyzes mergers incentives in an asymmetric mixed oligopoly consisting of two identical private firms and one public firm. It is shown that when there is a technological gap between the public and private firms, both of them will want to merge when the public firm is inefficient and the percentage of the shares owned by private owners after the merger is relatively high. When all firms have identical technology, public and private firms will want to merge when the percentage of the shares owned by private owner in the merged entity is relatively low (Artz et al. 2009). Yet, we show that when the technological gap is high enough, the merger between the public firm and one private firm often includes complete privatization.

Suggested Citation

  • Sylvain Kadohognon Ouattara, 2015. "Incentives to merge in asymmetric mixed oligopoly," Post-Print halshs-01184003, HAL.
    • Handle: RePEc:hal:journl:halshs-01184003
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    References listed on IDEAS

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    1. Yoshio Kamijo & Yasuhiko Nakamura, 2009. "Stable market structures from merger activities in mixed oligopoly with asymmetric costs," Journal of Economics, Springer, vol. 98(1), pages 1-24, September.
    2. Barros, Pedro Pita, 1998. "Endogenous mergers and size asymmetry of merger participants," Economics Letters, Elsevier, vol. 60(1), pages 113-119, July.
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    5. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
    6. Kenneth Fjell & Debashis Pal, 1996. "A Mixed Oligopoly in the Presence of Foreign Private Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 737-743, August.
    7. repec:ebl:ecbull:v:12:y:2007:i:20:p:1-9 is not listed on IDEAS
    8. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
    9. Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(2), pages 264-281, October.
    10. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2003. "Mixed Duopoly, Merger and Multiproduct Firms," Journal of Economics, Springer, vol. 80(1), pages 27-42, August.
    11. Hikaru Ogawa & Ming Hsin Lin, 2005. "Cost reducing incentives in a mixed duopoly market," Economics Bulletin, AccessEcon, vol. 12(6), pages 1-6.
    12. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    13. Artz, Benjamin & Heywood, John S. & McGinty, Matthew, 2009. "The merger paradox in a mixed oligopoly," Research in Economics, Elsevier, vol. 63(1), pages 1-10, March.
    14. Yasuhiko Nakamura & Tomohiro Inoue, 2007. "Mixed Oligopoly and Productivity-Improving Mergers," Economics Bulletin, AccessEcon, vol. 12(20), pages 1-9.
    15. Kohei Kamaga & Yasuhiko Nakamura, 2007. "The Core and Productivity-Improving Mergers in Mixed Oligopoly," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 6(3), pages 181-198, December.
    16. Yuanzhu Lu, 2007. "Endogenous timing in a mixed oligopoly consisting of a single public firm and foreign competitors," Economics Bulletin, AccessEcon, vol. 12(2), pages 1-7.
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    Cited by:

    1. Bárcena-Ruiz, Juan Carlos & Garzón, María Begoña, 2020. "Mergers between local public firms," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    2. Bisceglia, Michele & Padilla, Jorge & Piccolo, Salvatore & Sääskilahti, Pekka, 2023. "On the bright side of market concentration in a mixed-oligopoly healthcare industry," Journal of Health Economics, Elsevier, vol. 90(C).

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    More about this item

    Keywords

    mergers incentives; privatization; oligopoly;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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