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Volume 14
Issue 2
Online publication date 2018-02-22
Title A discussion of joint bank and industry concentration
Author Gerasimos Soldatos
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.

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Keywords Bank and industry concentration, innovation, industrial policy
Pages 207-216
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