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Technological Asymmetry, Externality, and Merger: The Case of a Three-Firm Industry

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Authors
Kabiraj, Tarun
Issue Date
2003
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 16 (No. 1 2003): 1-22
Keywords
externality; Technological asymmetry; Grand coalition
Abstract
We construct a model of three firms oligopoly with homogeneous goods and portray situations where firms fail to merge into monopoly. although such a merger maximizes aggregate profits. The degree of technological asymmetry and the effects of externalities determine the outcome via their effects on the profitability of a bilateral merger. There are situations when an inefficient firm. that cannot survive in a Cournot competition. obtains a positive payoff in the grand coalition. There are also cases when the efficient firm has a disadvantage to bargain.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1290
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.16(1) (Spring 2003)
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