Horizontal mergers and exit in declining industries
AbstractPrevious work on exit in declining industries has neglected mergers. This paper examines a simple model that illustrates how mergers can affect the order of exit. The model also predicts which declining industries experience horizontal mergers. Mergers are more likely if (1) the inverse demand curve is steep at high levels of output and flat at low levels of output; (2) the industry declines slowly early on and rapidly later on; and (3) market concentration is high. The conditions that make mergers privately profitable also tend to make them socially optimal.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 12 (2005)
Issue (Month): 2 ()
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Other versions of this item:
- Darren Filson & Bunchon Songsamphant, . "Horizontal Mergers and Exit in Declining Industries," Claremont Colleges Working Papers 2001-13, Claremont Colleges.
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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