Dragone, Davide
(2008)
Should One Sell Domestic Firms to Foreign Ones? A Tale of Delegation, Acquisition and Collusion.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 26.
DOI
10.6092/unibo/amsacta/4627.
In: Quaderni - Working Paper DSE
(623).
ISSN 2282-6483.
Full text available as:
Abstract
In a model of repeated Cournot competition under complete information, I
show how the existence of a fringe of managerial firms affects the stability
of a cartel of strict profit-maximizing firms. There always exists a critical
dimension of the fringe that makes the cartel unstable, and this dimension is
non-monotone in the total number of Örms. By appropriately selecting the
dimension of the fringe, a policy maker can affect the equilibrium outcome.
As an example, I consider the case of a domestic authority that is contemplating whether to allow entry of a fringe of managerial foreign firms in the
domestic market to increase the competitive pressure, thereby enhancing
domestic welfare.
Abstract
In a model of repeated Cournot competition under complete information, I
show how the existence of a fringe of managerial firms affects the stability
of a cartel of strict profit-maximizing firms. There always exists a critical
dimension of the fringe that makes the cartel unstable, and this dimension is
non-monotone in the total number of Örms. By appropriately selecting the
dimension of the fringe, a policy maker can affect the equilibrium outcome.
As an example, I consider the case of a domestic authority that is contemplating whether to allow entry of a fringe of managerial foreign firms in the
domestic market to increase the competitive pressure, thereby enhancing
domestic welfare.
Document type
Monograph
(Working Paper)
Creators
Keywords
Delegation, Cournot oligopoly, Cartel stability, Fringe.
Subjects
ISSN
2282-6483
DOI
Deposit date
16 Feb 2016 15:04
Last modified
16 Feb 2016 15:04
URI
Other metadata
Document type
Monograph
(Working Paper)
Creators
Keywords
Delegation, Cournot oligopoly, Cartel stability, Fringe.
Subjects
ISSN
2282-6483
DOI
Deposit date
16 Feb 2016 15:04
Last modified
16 Feb 2016 15:04
URI
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