A dynamic model of endogenous horizontal mergers

Research output: Contribution to journalArticle

102 Scopus citations

Abstract

I develop a dynamic model of mergers, where mergers, investment, entry, and exit are endogenous variables rationally chosen by firms to maximize expected future profits. This model differs from previous analyses in that it incorporates dynamics and endogenizes the merger process. The model generates reasonable predictions: allowing for mergers has the expected effect on entry, exit, investment, and surpluses; changes in tastes and technologies affect industry equilibrium in plausible ways. The results demonstrate that this type of analysis is feasible and can potentially be used as a tool for antitrust policy analysis.

Original languageEnglish (US)
Pages (from-to)56-83
Number of pages28
JournalRAND Journal of Economics
Volume30
Issue number1
DOIs
StatePublished - Jan 1 1999
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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