Price-setting behavior in the presence of social interactions
AbstractWe argue in this paper that a more active market for corporate control may weaken the takeover threat. We show that an increase in the number of potential raiders tends to decrease the probability of a takeover. This in turn weakens managerial incentives. The lower managerial effort level that results in equilibrium negatively affects the ex ante value of the firm.
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Bibliographic InfoPaper provided by University of Groningen, CCSO Centre for Economic Research in its series CCSO Working Papers with number 200307.
Date of creation: 2003
Date of revision:
Other versions of this item:
- Adriaan R. Soetevent & Lambert Schoonbeek, 2006. "Price-Setting Behavior in the Presence of Social Interactions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(2), pages 208-228, March.
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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