A discussion of joint bank and industry concentration
A discussion of joint bank and industry concentration
Author(s): Gerasimos SoldatosSubject(s): Economy
Published by: Prague Development Center
Keywords: Bank and industry concentration; innovation; industrial policy
Summary/Abstract: This article examines bank and industry concentration jointly within the static framework of Cournot competition. The general equilibrium is one in which banks form a multiplant monopoly and firm profit is zero. This is an unstable equilibrium because: (A) Firms have an incentive to (i) collude to “fight banks back” in the context of bilateral monopoly bargaining, and/or (ii) modernize their business towards financial independence; (B) Banks’ best response is (i) innovation too, combined with (ii) disciplinary credit rationing.
Journal: Business and Economic Horizons
- Issue Year: 14/2018
- Issue No: 2
- Page Range: 207-216
- Page Count: 10
- Language: English