Horizontal Mergers in a Dynamic Cournot Market: Solving the Free Riding Issue Without Efficiency Gains

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dc.contributor.author Escrihuela, Marc
dc.contributor.author Ferrarese, Walter
dc.date.accessioned 2020-04-23T07:01:13Z
dc.identifier.uri http://hdl.handle.net/11201/152106
dc.description.abstract [eng] We discuss horizontal mergers in a linear, homogeneous, symmetric Cournot market where the new entity repeatedly competes with outside firms over an indefinite horizon and efficiency gains are ruled out. If the degree of collusion among the outside firms is large enough, then, despite the large payoff of each outsider, we obtain output configurations solving both the profitability and the free riding issues. Such a result requires that mergers involve a sufficiently small number of firms, which is in sharp contrast with the findings in the literature and rationalize the empirical fact that relatively small mergers, even in absence of synergies, do actually occur and that, although outside firms may benefit from the merger of their rivals, insiders end up being better off. Finally, we show that merging can often be a more advantageous alternative than a fully collusive agreement, in which, moreover, the free riding component is not solved.
dc.format application/pdf
dc.relation.isformatof https://doi.org/10.1515/bejeap-2018-0321
dc.relation.ispartof B e Journal Of Economic Analysis & Policy, 2019, vol. 19, num. 4, p. 1-14
dc.rights , 2019
dc.subject.classification 33 - Economia
dc.subject.other 33 - Economics. Economic science
dc.title Horizontal Mergers in a Dynamic Cournot Market: Solving the Free Riding Issue Without Efficiency Gains
dc.type info:eu-repo/semantics/article
dc.date.updated 2020-04-23T07:01:14Z
dc.date.embargoEndDate info:eu-repo/date/embargoEnd/2026-12-31
dc.embargo 2026-12-31
dc.subject.keywords mergers
dc.subject.keywords free-riding
dc.rights.accessRights info:eu-repo/semantics/embargoedAccess
dc.identifier.doi https://doi.org/10.1515/bejeap-2018-0321


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