 Anticompetitive traps and votingMiguel González-Maestre and Diego Peñarrubia Mathematical Social Sciences, 2020, vol. 104, issue C, 47-59 Abstract: In a two-sector economy, we consider the endogenous determination of the level of competition in the imperfectly competitive sector, under democratic, non-manipulated voting. In the context of the Salop’s (1979) circular model, we identify conditions such that in addition to a competitive equilibrium (with most voters choosing the efficient level of competition intensity), an inefficient equilibrium is observed in which a majority of fully rational and informed citizens vote for an inefficiently low level of competition intensity. In particular, we show that under reasonable conditions, a coalition of middle-class entrepreneurs, who vote for a lower level of competition intensity, defeats a “coalition of extremes” formed by high- and low-productivity entrepreneurs and pure consumers, who vote for a higher level of competition intensity. In addition, we show that the higher the degree of similarity among entrepreneurs, the more inefficient the anticompetitive equilibrium. Keywords: Competition policy; Heterogeneous productivity; Political-economy games; Coalition of extremes; Welfare (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:104:y:2020:i:c:p:47-59 DOI: 10.1016/j.mathsocsci.2020.01.007 Access Statistics for this article Mathematical Social Sciences is currently edited by J.-F. Laslier More articles in Mathematical Social Sciences from Elsevier |
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