Endogenous Mergers and Collusion in Asymmetric Market Structures

• Type: Article in International Scientific Journal
• Date: 2012

Authors

Mattias Ganslandt (Author) Other; Lars Persson (Author) Other; Helder Vasconcelos (Author) FEP

Journal

Title: Economica

Vol. 79 No. 316

Pages: 766-791

ISSN: 0013-0427

Publisher: Wiley-Blackwell

Indexing

ISI Web of Knowledge - 17 Citations

ISI Web of Science

Scopus - 17 Citations

Econlit

Scientific classification

FOS: Social sciences > Economics and Business

Associated Projects

PTDC/EGE-ECO/099784/2008 - Modelos em "Antitrust Economics"

Other information

Authenticus ID: P-002-53Q

DOI: 10.1111/j.1468-0335.2012.00937.x

Abstract (EN): Recent empirical evidence shows that cartels are often asymmetric, while cartel theory suggests that firm symmetry is conducive to collusion. Including an indivisible cost of cartelization, we show that medium asymmetric market structures are more conducive to collusion, since they balance the small firms' incentives to stay in the cartel against the need to cover the cartel leaders' indivisible cartelization cost. Using an endogenous merger model, we also show that forbidding mergers leading to symmetric market structures can induce mergers leading to asymmetric market structures with a higher risk of collusion. Current antisymmetry merger policy can thus be counterproductive.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 26