Cellini, Roberto ;
Lambertini, Luca
(2003)
Capital Accumulation and Horizontal Mergers in Differential Oligopoly Games.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 25.
DOI
10.6092/unibo/amsacta/4817.
In: Quaderni - Working Paper DSE
(477).
ISSN 2282-6483.
Full text available as:
Abstract
The existing (static) literature stresses the relevance of capital inputs in determining
whether any given merger is (i) profitable and (ii) socially efficient,
or not. We take a differential game approach to the same issue, proposing
two different models based, respectively, on the capital accumulation dynamics
introduced by Ramsey and Solow, respectively. We show that the change
in the steady state size of productive plants induced by a merger may play a
decisive role in determining whether such a merger is profitable, or socially
efficient. However, unlike the static contributions in the same vein, we show
that the parameter sets where, respectively, firms find it convenient to merge,
and the merger is welfare-increasing, do not intersect at all, irrespectively of
the capital accumulation dynamics being considered. This entails that a regulator
concerned with the welfare performance of an industry should prevent
firms from carrying out any horizontal merger
Abstract
The existing (static) literature stresses the relevance of capital inputs in determining
whether any given merger is (i) profitable and (ii) socially efficient,
or not. We take a differential game approach to the same issue, proposing
two different models based, respectively, on the capital accumulation dynamics
introduced by Ramsey and Solow, respectively. We show that the change
in the steady state size of productive plants induced by a merger may play a
decisive role in determining whether such a merger is profitable, or socially
efficient. However, unlike the static contributions in the same vein, we show
that the parameter sets where, respectively, firms find it convenient to merge,
and the merger is welfare-increasing, do not intersect at all, irrespectively of
the capital accumulation dynamics being considered. This entails that a regulator
concerned with the welfare performance of an industry should prevent
firms from carrying out any horizontal merger
Document type
Monograph
(Working Paper)
Creators
Subjects
ISSN
2282-6483
DOI
Deposit date
09 Mar 2016 11:49
Last modified
09 Mar 2016 11:49
URI
Other metadata
Document type
Monograph
(Working Paper)
Creators
Subjects
ISSN
2282-6483
DOI
Deposit date
09 Mar 2016 11:49
Last modified
09 Mar 2016 11:49
URI
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