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Abstract(s)
In this paper we use a two-stage game to model endogenous mergers. In the second stage of the game, firms compete on the product market. In the first stage, anticipating what will happen in the second stage, firms decide whether or not to merge. In the model, merger occurrence is determined by the interplay of the initial number of firms in the industry, the expected competitive intensity, and the possibility to economize on fixed costs through merger. It is shown that the equilibrium market structure concentration is decreasing in the first of these factors and increasing in the other two. Some implications for antitrust policy are discussed
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Citation
Rodrigues, V. (1998). Endogenous mergers and market structure. Working papers: Economics. N.º 5, 32 p.