Journal article
Merger performance under uncertain efficiency gains
International journal of industrial organization, Vol.27(2), pp.264-273
03/01/2009
DOI: 10.1016/j.ijindorg.2008.08.006
Abstract
In view of the uncertainty over the ability of merging firms to achieve efficiency gains, we model the post-merger situation as a Cournot oligopoly wherein the outsiders face uncertainty about the merged entity's final cost. At the Bayesian equilibrium, a bilateral merger is profitable provided the non-merged firms sufficiently believe that the merger will generate large enough efficiency gains,
even if ex post none actually materialize. The effects of the merger on market performance are shown to follow similar threshold rules. The findings are broadly consistent with stylized facts. An extensive welfare analysis is conducted, bringing out the key role of efficiency gains and the different implications of consumer and social welfare standards.
Details
- Title: Subtitle
- Merger performance under uncertain efficiency gains
- Creators
- Rabah Amir - University of ArizonaEffrosyni Diamantoudi - Concordia UniversityLicun Xue - McGill University
- Resource Type
- Journal article
- Publication Details
- International journal of industrial organization, Vol.27(2), pp.264-273
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.ijindorg.2008.08.006
- ISSN
- 0167-7187
- eISSN
- 1873-7986
- Language
- English
- Date published
- 03/01/2009
- Academic Unit
- Economics
- Record Identifier
- 9984380484302771
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