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Mergers, Mavericks, and Tacit Collusion

Darai, Donja and Roux, Catherine and Schneider, Frédéric. (2019) Mergers, Mavericks, and Tacit Collusion. Working Papers, 2019 (02). Cambridge.

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Official URL: https://edoc.unibas.ch/73142/

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Abstract

We study whether firms' collusive ability influences their incentives to merge: when tacit collusion is unsuccessful, firms may merge to reduce competitive pressure. We run a series of Bertrand oligopoly experiments where the participants decide whether, when, and to whom they send merger bids. Our experimental design allows us to observe (i) when and to whom mergers are proposed, (ii) when and by whom merger offers are accepted, and (iii) the effect on prices when mergers occur in this way. Our findings suggest that firms send more merger offers when prices are closer to marginal costs. Maverick firms that cut prices and thereby fuel competition are the predominant (but reluctant) receivers of these offers.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Industrial Organization and Regulation of Energy Markets (Roux)
UniBasel Contributors:Roux, Catherine
Item Type:Working Paper
Publisher:Cambridge Judge Business School
Number of Pages:37
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Identification Number:
  • handle: RePEc:jbs:wpaper:201902
Last Modified:10 Dec 2019 07:52
Deposited On:10 Dec 2019 07:52

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