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Three essays on collusion and mergers
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Florence : European University Institute, 2002
EUI; ECO; PhD Thesis
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VASCONCELOS, Helder, Three essays on collusion and mergers, Florence : European University Institute, 2002, EUI, ECO, PhD Thesis - https://hdl.handle.net/1814/5097
Abstract
This thesis aims at contributing to the analysis of the issues of collusion and mergers from an industrial organization perspective. The thesis is composed of three main chapters. In what follows each of those chapters will be discussed in greater detail. In particular, I will briefly describe the model considered in each chapter, its relation to the literature, and the contribution each chapter makes to the existing literature. Chapter one deals with the issue of entry and collusion both theoretically and empirically. In particular, it re-considers Green and Porter’s (1984) model of collusion with imperfect monitoring (in the price version, as in Tirole’s (1988) textbook). In this model with homogeneous goods, a firm can either charge the monopoly price to share the market with other firms or secretly undercut its rivals to get the whole market. Since market demand is affected by stochastic factors, firm’s demand could be zero even when no firm is deviating. Given that the only available information to each firm is its own sales, it is difficult for them to infer whether a low demand is caused by a secret price cut or it is just due to a “bad” demand shock. In equilibrium, the firms need to start a price-war (i.e., charge the competitive price) when the demand is zero to maintain the incentive to charge the monopoly price in the collusive phases. As a result, a price-war occurs with positive probability as an equilibrium phenomenon.
Table of Contents
-- Entry effects on cartel stability and the joint executive committee
-- Tacit collusion, cost asymmetries and mergers
-- Towards a characterization of the upper bound to concentration in endogenous sunk cost industries
Additional Information
Defence date: 3 October 2002
Examining Board: Prof. Pierpaolo Battigalli, Università Bocconi; Prof. Luis Cabral, Leonard Stern School of Business, NYU; Prof. Massimo Motta, European University Institute (Supervisor); Prof. Karl Schlag, European University Institute; Prof. John Sutton, London School of Economics
First made available online on 16 April 2018
Examining Board: Prof. Pierpaolo Battigalli, Università Bocconi; Prof. Luis Cabral, Leonard Stern School of Business, NYU; Prof. Massimo Motta, European University Institute (Supervisor); Prof. Karl Schlag, European University Institute; Prof. John Sutton, London School of Economics
First made available online on 16 April 2018