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- Delegation And Mergers In Oligopoly

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Author Info
Javier M. López Cuñat (Universidad de Alicante)
Miguel González-Maestre (Universidad Autónoma de Barcelona)

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Abstract

In this paper we analyze the effect strategic delegation on the profitability of mergers in the context of a Cournot oligopoly with linear demand and cost functions. It is assumed that, after the merging process is completed, the owner of every independent firm decides its managerial incentive for his manager. We show that the required fraction of merging firms for a merger to be profitable, in our model with delegation, is substantially smaller that without delegation.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1999-03.pdf
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File Function: Fisrt version / Primera version, 1999
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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1999-03.

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Length: 9 pages
Date of creation: Mar 1999
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:1999-03

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Related research
Keywords: Strategic Delegation; Mergers; Cournot Oligopoly;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May. [Downloadable!] (restricted)
  2. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen. [Downloadable!] (restricted)
  3. Steven D. Sklivas, 1987. "The Strategic Choice of Managerial Incentives," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 452-458, Autumn. [Downloadable!] (restricted)
  4. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-40, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Oliver Gürtler & Matthias Kräkel, 2006. "Mergers, Litigation and Efficiency," Discussion Papers 185, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  2. Lommerud, Kjell Erik & Straume , Odd Rune & Sorgard, Lars, 2002. "Downstream Merger with Oligopolistic Input Suppliers," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  3. Thilo W. Glebe & Uwe Latacz-Lohmann, 2005. "Optimal adjustment of environmental policy following agricultural trade liberalization," Discussion Papers 082005, Technische Universität München, Environmental Economics and Agricultural Policy Group. [Downloadable!]
  4. Steffen Huck & Kai Konrad, 2003. "Strategic Trade Policy and Merger Profitability," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Yoshio Kamijo & Yasuhiko Nakamura, 2009. "Stable market structures from merger activities in mixed oligopoly with asymmetric costs," Journal of Economics, Springer, vol. 98(1), pages 1-24, September. [Downloadable!] (restricted)
  6. Matthias Kräkel & Dirk Sliwka, 2002. "Strategic Delegation and Mergers in Oligopolistic Contests," Bonn Econ Discussion Papers bgse2_2002, University of Bonn, Germany. [Downloadable!]
    Other versions:
  7. Emilie Dargaud, 2005. "Monopolization through acquisitions in a differentiated product industry," Working Papers 0507, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
  8. George Symeonidis, 2009. "Downstream merger and welfare in a bilateral oligopoly," Economics Discussion Papers 671, University of Essex, Department of Economics. [Downloadable!]
  9. Christos Cabolis & Constantine Manasakis & Emmanuel Petrakis, 2008. "Horizontal Mergers and Acquisitions with Endogenous Efficiency Gains," Working Papers 0817, University of Crete, Department of Economics. [Downloadable!]
  10. Ana MAULEON & Vincent J. VANNETELBOSCH, 2002. "Union Delegation and Incentives for Merger," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  11. José Méndez-Naya, 2008. "Merger profitability in mixed oligopoly," Journal of Economics, Springer, vol. 94(2), pages 167-176, July. [Downloadable!] (restricted)
  12. Steffen Ziss, 2005. "Horizontal Mergers and Successive Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 5(2), pages 99-114, June. [Downloadable!] (restricted)
  13. Glebe, Thilo & Latacz-Lohmann, Uwe, 2005. "Agricultural Trade Liberalisation and Strategic Environmental Policy," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24609, European Association of Agricultural Economists. [Downloadable!]
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