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Multimarket Exit, Strategic Merger, and Collusion

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We study the duopoly exit equilibrium in a multimarket environment with declining demand, and investigate the roles of strategic merger, agency cost, and collusion in a multimarket exit game. Cross-market spillovers with endogenous duration and the strategic merger of outside firms can serve as sources of commitment in a multipoint war of attrition, and might help large firms successfully force their smaller rivals out. Agency cost can be beneficial in bolstering strategic commitment in declining markets. Under certain conditions, multimarket contact might facilitate collusion in a multimarket exit game where firms yield a market to each other reciprocally. (JEL: L00, L13, D21)
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Document Type: Research Article

Publication date: 01 September 2017

This article was made available online on 07 December 2016 as a Fast Track article with title: "Multimarket Exit, Strategic Merger, and Collusion".

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  • Founded as Zeitschrift für die gesamte Staatswissenschaft in 1844.

    As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.

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