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Partial acquisition with an excluded public rival

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  • Cheng, Long
  • Heywood, John S.
  • Ye, Guangliang

Abstract

This paper examines partial acquisition in the face of an outside public firm. We show that when the acquiring firm is domestic, partial acquisition takes place for any institutional threshold for pricing control. Yet, when the acquiring firm is foreign, partial acquisition can be forestalled by a sufficiently high threshold requirement. This threshold can increase domestic welfare and global welfare by stopping an inefficient partial acquisition. Moreover, this mixed market structure can generate greater global welfare than one with an outside private firm.

Suggested Citation

  • Cheng, Long & Heywood, John S. & Ye, Guangliang, 2019. "Partial acquisition with an excluded public rival," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 164-173.
    • Handle: RePEc:eee:reveco:v:59:y:2019:i:c:p:164-173
    DOI: 10.1016/j.iref.2018.08.017
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    References listed on IDEAS

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    More about this item

    Keywords

    Partial acquisition; Public firm; Salop circular market; Control threshold;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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