Profitability of Horizontal Mergers in Trigger Strategy Game

Cesi Berardino
CEIS Working Papers
It is shown that, in a dynamic competition, an exogenous horizontal merger is profitable even if a small share of active firms merge. However, each firm has incentive to remain outside the merger because it would benefit more (Insiders' dilemma). We show
Number: 229
Date: Wednesday 01 March 2006
Revision Date: Wednesday 01 March 2006