TY  - BOOK
AU  - Gowrisankaran,Gautam
AU  - Holmes,Thomas J.
ED  - National Bureau of Economic Research.
TI  - Do Mergers Lead to Monopoly in the Long Run? Results from the Dominant Firm Model
T2  - NBER working paper series
PY  - 2002///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - September 2002; Hardcopy version available to institutional subscribers
N2  - Will an industry with no antitrust policy converge to monopoly, competition, or somewhere in between? We analyze this question using a dynamic dominant firm model with rational agents, endogenous mergers, and constant returns to scale production. We find that perfect competition and monopoly are always steady states of this model, and that there may be other steady states with a dominant firm and a fringe co-existing. Mergers are likely only when supply is inelastic or demand is elastic, suggesting that the ability of a dominant firm to raise price, through monopolization is limited. Additionally, as the discount factor increases, it becomes harder to monopolize the industry, because the dominant firm cannot commit to not raising prices in the future
UR  - https://www.nber.org/papers/w9151
UR  - http://dx.doi.org/10.3386/w9151
ER  -