Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5078549 | International Journal of Industrial Organization | 2008 | 23 Pages |
Abstract
We analyse the effects of investment decisions and firms' internal organisation on the efficiency and stability of horizontal mergers. In our framework efficiency gains are endogenous and there might be internal conflict within merged firms. We show that, both with and without conflict, stable mergers often do not generate efficiency gains. In the case of internal conflict, mergers may even lead to efficiency losses. Our welfare results suggest that antitrust authorities may approve welfare-reducing mergers (type II error) and block welfare-enhancing mergers (type I error) if they assume that potential efficiency gains will always be realised. In addition, the paper offers a possible explanation for merger failures.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Albert Banal-Estañol, Inés Macho-Stadler, Jo Seldeslachts,