Profitable Horizontal Mergers without Cost Advantages: The Role of Internal Organization, Information and Market Structure
AbstractMerged firms are typically rather complex organizations. Accordingly, merger has a more profound effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare-improving even if costs are linear. The driving force behind these results, which help to reconcile theory with various empirical findings, is the assumption that information about output decisions flows more freely within a merged firm. This induces a commitment advantage for the merged firm. Copyright (c) The London School of Economics and Political Science 2004.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 71 (2004)
Issue (Month): 284 (November)
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Other versions of this item:
- Huck, Steffen & Konrad, Kai A. & Müller, Wieland, 2001. "Profitable horizontal mergers without cost advantages: The role of internal organization, information, and market structure," Discussion Papers, various Research Units FS IV 01-05, Social Science Research Center Berlin (WZB).
- Steffen Huck & Kai A. Konrad & Wieland Müller, 2001. "Profitable Horizontal Mergers without Cost Advantages: The Role of Internal Organization, Information, and Market Structure," CESifo Working Paper Series 435, CESifo Group Munich.
- Huck, S. & Konrad, K.A. & Müller, W., 2004. "Profitable horizontal mergers without cost advantage: The role of intenal organization, information and market structure," Open Access publications from Tilburg University urn:nbn:nl:ui:12-143121, Tilburg University.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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