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Title: Profitability of horizontal mergers in trigger strategy game
Authors: Cesi, Berardino
First Published: Jan-2006
Publisher: Dept. of Economics, University of Leicester
Abstract: It is shown that, in a dynamic competition, an exogenous horizontal merger is pro table even if a small share of active rms merge. However, each rm has incentive to remain outside the merger because it would ben- e t more (Insiders dilemma). We show that in an in nite repeated game in which the rms use trigger strategies an exogenous bilateral merger can be pro table and the Insiders dilemma is mitigated.
Series/Report no.: Papers in Economics
Type: Report
Appears in Collections:Reports, Dept. of Economics

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