Merger incentives in an international oligopoly composed of Kantian optimization firms with differentiated goods

Abstract

AbstractThis paper revisits horizontal mergers in an international oligopoly with differentiated goods under the segmented market assumption. In particular, we focus on an industry composed of firms that engage in their Kantian optimization. Strikingly from the case of each firm's Nashian optimization, we show that a duopoly with two international mergers can be uniquely observed in equilibrium except for a full monopoly, and the highest total social welfare can be achieved in its equilibrium market structure. In addition, we consider the managerial delegation cases from the viewpoints of two types of each firm's Kantian optimization.