Back to Search
Start Over
COLLABORATE OR CONSOLIDATE: ASSESSING THE COMPETITIVE EFFECTS OF PRODUCTION JOINT VENTURES
- Source :
- Economic Inquiry. January, 2019, Vol. 57 Issue 1, p73, 12 p.
- Publication Year :
- 2019
-
Abstract
- We analyze collaborations in which two firms facing external competition reorganize to form an input joint venture as an alternative to horizontal merger. Under standard regularity conditions, the collaboration can lead to higher profits than a horizontal merger, though the effect on prices, quantities, and welfare depends on the form of downstream competition. In light of our results regarding profits, we provide reasons why firms might still wish to merge: imperfect information, cost synergies, and organizational asymmetries. We further consider how our comparisons change with the managerial structure of the joint venture (i.e., by delegation of input pricing). (JEL L13, L23, L42)<br />I. INTRODUCTION Collaboration via joint production can present an attractive alternative for rival firms contemplating a horizontal merger, particularly for large firms concerned with an antitrust challenge. U.S. antitrust guidelines [...]
- Subjects :
- United States. Federal Communications Commission
United States. Department of Justice
AT&T Inc. -- Joint ventures
Telecommunications industry -- Joint ventures
Pricing
Joint ventures
Telecommunications services industry
Product price
Company joint venture
Business, general
Economics
Organisation for Economic Co-operation and Development
Subjects
Details
- Language :
- English
- ISSN :
- 00952583
- Volume :
- 57
- Issue :
- 1
- Database :
- Gale General OneFile
- Journal :
- Economic Inquiry
- Publication Type :
- Academic Journal
- Accession number :
- edsgcl.578273370
- Full Text :
- https://doi.org/10.1111/ecin.12707