A discussion of joint bank and industry concentration

Gerasimos Soldatos

Business and Economic Horizons (BEH), 2018, vol. 14, issue 2, 207-216

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: Bank and industry concentration; innovation; industrial policy. (search for similar items in EconPapers)
JEL-codes: D43 G21 L22 O31 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:pdc:jrnbeh:v:14:y:2018:i:2:p:207-216

DOI: 10.15208/beh.2018.16

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