Mergin Firms' Strategies and the Merger Paradox

  1. José Méndez-Naya
Revista:
Nova Economia

ISSN: 0103-6351

Año de publicación: 2018

Año: 28

Número: 3

Páginas: 1001-1015

Tipo: Artículo

DOI: 10.1590/0103-6351/4155 DIALNET GOOGLE SCHOLAR

Otras publicaciones en: Nova Economia

Objetivos de desarrollo sostenible

Resumen

Abstract Taking a model of horizontal mergers as a reference, the purpose of this paper is to qualify the merger paradox by proving that a multidivisional firm formed by a merger could be sustainable even though the merger does not involve most of the firms in the market. Specifically, it is proved that the minimum number of merging firms to have a profitable merger, assuming both simultaneous and sequential games, is lower in our model than in the traditional literature. Furthermore, it is proved that, if the multidivisional firm sets the number of divisions optimally, the merger is sustainable and less harmful to welfare than in the traditional model.

Referencias bibliográficas

  • Barcena-Ruíz, J. C.,Garzón, M. B. (2000). Corporate Merger, Organizational Form, and Control of Labor. Spanish Economic Review. 2. 129
  • Baye, M.,Crocker, K.,Ju, J. (1996). Divisionalization, Franchising, and Divestiture Incentives in Oligopoly. American Economic Review. 86. 223
  • Cheung, K. F. (1992). Two Remarks on the Equilibrium Analysis of Horizontal Mergers. Economics Letters. 40. 119
  • Creane, A.,Davidson, C. (2004). Multidivisional Firms, Internal Competition, and the Merger Paradox. Canadian Journal of Economics. 37. 951
  • Daughety, A. (1990). Beneficial Concentration. American Economic Review. 80. 107
  • Escrihuela-Villar, M.,Faulí-Oller, R. (2008). Mergers in Asymmetric Stackelberg Markets. Spanish Economic Review. 10. 279
  • Farrell, J.,Shapiro, C. (1990). Horizontal Merger: An Equilibrium Analysis. American Economic Review. 80. 107
  • Fauli-Oller, R. (1997). On Merger Profitability in a Cournot Setting. Economics Letters. 54. 75
  • González-Maestre, M. A.,López Cuñat, J. (2001). Delegation and Mergers in Oligopoly. International Journal of Industrial Organization. 19. 1263
  • Hubbard, R. G.,Palia, D. (1999). A Reexamination of Conglomerated Merger Wave in the 1960s: An Internal Capital Markets View. Journal of Finance. 54. 1131
  • Huck, S.,Konrad, K. A.,Müller, W. (2004). Profitable Horizontal Mergers without Costs Advantages: The Role of Internal Organization, Information and Market Structure. Economica. 71. 575
  • Levin, D. (1990). Horizontal Merger. The 50-Percent Bench-Mark. American Economic Review. 80. 1238
  • Méndez-Naya, J. (2014). Sustentabilidad de las Fusiones, Asimetrías de Información y Estrategias de las Empresas No Fusionadas. El Trimestre Económico. 227
  • Perry, M. K.,Porter, R. H. (1985). Oligopoly and the Incentives for Horizontal Mergers. American Economic Review. 75. 219
  • Prechel, H.,Boies, J.,Woods, T. (1999). Debt, Mergers and Acquisitions, Institutional Arrangements and Change to the Multilayered Subsidiary Form. Social Sciences Quarterly. 80. 115
  • Salant, S.,Switzer, S.,Reynolds, R. J. (1983). Loses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium. Quarterly Journal of Economics. 48. 185-200
  • Schwartz, M.,Thompson, E. A. (1986). Divisionalization and Entry Deterrence. Quarterly Journal of Economics. 101. 307
  • Zey, M.,Swenson, T. (1999). The Transformation of the Dominant Corporate Form from Multidivisional to Multisubsidiary: The Role of the 1986 Tax Reform Act. Sociological Quarterly. 40. 241
Fuente de los datos: Dialnet