Group Formation, Mergers, and Overlapping Ownership in Aggregative Games with Information Sharing

We investigate agents' incentives to form mergers (or groups) by sharing their private information and the associated welfare effects in aggregative games. The merging agents always have incentives to share their information with each other in horizontal/conglomerate merger games. A merger decreases the expected payoff of each merging agent if and only if the strategies of agents are sufficiently high strategic substitutes and the number of merging agents is sufficiently low under complete or too noisy information. Expected consumer and total welfare may increase after a horizontal/conglomerate merger or common/cross ownership with information efficiencies in Cournot and Bertrand games with substitutable or complementary products. Moreover, a group of any size increases (decreases) expected total efforts in partnership games with complementary (substitutable) strategies; it increases public good contributions, gas emission abatements, and decreases expected total resource extractions in public good provision, gas emission, and common-resource games, respectively; and it increases expected welfare in these games. Finally, we study the value and aggregation of information in our set-up