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- Title
BARGAINING FAILURES AND MERGER POLICY.
- Authors
Burguet, Roberto; Caminal, Ramon
- Abstract
We study approval rules in a model where horizontal merger proposals arise endogenously as the outcome of negotiations among the firms in the industry. We make two main points. First, relatively inefficient merger proposals succeed with positive probability. That is, the negotiation process may result in a particular merger agreement despite the existence of an alternative one that would generate higher profits and higher consumer surplus. Second, the antitrust authority should optimally commit to an approval rule that is more stringent for all mergers than the optimal ex post rule.
- Subjects
MERGERS &; acquisitions; MERGER agreements; HORIZONTAL merger; BUSINESS negotiation; CONSUMERS' surplus
- Publication
International Economic Review, 2015, Vol 56, Issue 3, p1019
- ISSN
0020-6598
- Publication type
Article
- DOI
10.1111/iere.12130