A political economy model of merger policy in international markets
In: Discussion paper series 6894
In: Industrial organization
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In: Discussion paper series 6894
In: Industrial organization
In: EUI working papers / Robert Schuman Centre, 00,33
World Affairs Online
In: Competition Policy in the EU, S. 95-129
In: Ricerche economiche, Band 50, Heft 3, S. 293-315
ISSN: 0035-5054
In: The Economic Journal, Band 102, Heft 412, S. 578
D'Aspremont and Jacquemin's (1988) model is extended to study alternative configurations of research agreements in a two--country integrated world economy. Under unambiguous conditions on spillovers we show that: 1) Allowing national firms to cooperate in R\&D confers them an advantage over foreign rivals, an effect similar to R\&D subsidies. 2) In a policy game, each government would allow national cooperative agreements. 3) Contrary to other trade policies which lead to a ``prisoners' dilemma'' result, welfare in both countries increases when they both allow R\&D cooperation. 4) Welfare is even higher if a generalized (international) coalition is formed.
BASE
In: Discussion paper series 2908
In: Industrial organization
In: Information economics and policy, Band 54, S. 100868
ISSN: 0167-6245
In: The Journal of Industrial Economics, Band 67, Heft 3-4, S. 409-447
SSRN
In: Economica, Band 79, Heft 313, S. 115-136
ISSN: 1468-0335
This paper looks at the political economy of merger policy under autarky and in international markets. We assume that merger policy is decided by antitrust authorities—whose objective is to maximize welfare—but can be influenced by governments, which are subject to lobbying by firms (insiders or outsiders to the merger). We argue that political economy distortions may explain some of the recently observed merger policy conflicts between authorities and politicians, as well as between institutions belonging to different countries. We illustrate our analysis with applications motivated by recent merger cases that have been widely debated in the international press.
We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it needs, thus making monopoly profits on later buyers. Several extensions are considered, including markets where scale economies exist because of demand externalities or two-sided market effects, and where markets are characterised by common costs. Conditions under which predation may take place in actual cases are also discussed.
BASE
In: The economic journal: the journal of the Royal Economic Society, Band 118, Heft 531, S. 1196-1222
ISSN: 1468-0297
In: American economic review, Band 96, Heft 3, S. 785-795
ISSN: 1944-7981
Rasmusen et al. (1991) and Segal and Whinston (2000) show that an incumbent monopolist might prevent entry of a more efficient competitor by exploiting externalities among buyers. We show that their results hold only when downstream competition among buyers is weak. Under fierce downstream competition, if entry took place, a free buyer would become more competitive and increase its output and profits at the expense of buyers that sign an exclusive deal with the incumbent. Anticipating that orders from a single buyer would trigger entry, no buyer will sign the exclusive deal and entry will occur. This result is robust across different specifications of the game.