Do Mergers Lead to Monopoly in the Long Run? Results From the Dominant Firm Model

This 42-page .pdf paper analyzes whether an industry with no antitrust policy will converge to monopoly, competition or somewher in between using a dominant firm model with rational agents, endogenous mergers and constant returns to scale production. It finds that mergers are likely only when supply is inelastic or demand is elastic, suggesting that the ability of a dominant firm to raise prices through … [ Read more ]