A discussion of joint bank and industry concentration

Gerasimos Soldatos

Business and Economic Horizons (BEH), 2018, vol. 14, issue 2

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.

Keywords: Industrial; Organization (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pdcbeh:285155

DOI: 10.22004/ag.econ.285155

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