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Asymmetric Information, Bargaining, and International Mergers

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  • Satya P. Das
  • Sarbajit Sengupta

Abstract

The formation of international mergers is examined in the presence of two kinds of asymmetric information, one when a local firm has private information on market size and the other when a foreign firm has private information on its technology. In each situation, parametric configurations are identified under which a merger offer may or may not be made. It also examines the kind of offer and the probability of its acceptance. The likelihood of a merger beingformed is also related to the basic market size, demand uncertainty, and cost uncertainty. Welfare effects of tax/subsidy policies by the host country are also analyzed.

Suggested Citation

  • Satya P. Das & Sarbajit Sengupta, 2001. "Asymmetric Information, Bargaining, and International Mergers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 565-590, December.
    • Handle: RePEc:bla:jemstr:v:10:y:2001:i:4:p:565-590
    DOI: 10.1111/j.1430-9134.2001.00565.x
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    References listed on IDEAS

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    1. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
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    4. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 185-199.
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    Citations

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    Cited by:

    1. Ray Chaudhuri, A., 2014. "Acquisitions by Multinationals and Trade Liberalization," Other publications TiSEM 9dbb83b3-8647-4b5f-952b-3, Tilburg University, School of Economics and Management.
    2. Banal-Estanol, Albert, 2007. "Information-sharing implications of horizontal mergers," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 31-49, February.
    3. Müller, Thomas, 2003. "The Multinational Enterprise," Munich Dissertations in Economics 799, University of Munich, Department of Economics.
    4. Arijit Mukherjee, 2006. "Cross-border merger and domestic welfare," Economics Bulletin, AccessEcon, vol. 6(16), pages 1-8.
    5. Ray Chaudhuri, A., 2011. "Cross-Border Mergers and Market Segmentation (Replaces CentER DP 2010-096)," Discussion Paper 2011-112, Tilburg University, Center for Economic Research.
    6. Leo A. Grunfeld & FRANCESCA SANNA-RANDACCIO, 2009. "Cross Border M&A: Who Buys Whom When Market Size and Technology Levels Differ?," DIS Technical Reports 2009-12, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    7. Damiano Montani & Daniele Gervasio & Andrea Pulcini & Camilla Marchesi, 2021. "Accounting Harmonisation through IAS/IFRS and Internationalisation: Evidence from FDIs and Cross-Border M&A," Accounting and Finance Research, Sciedu Press, vol. 10(3), pages 1-44, August.
    8. Amrita Ray Chaudhuri, 2014. "Cross-Border Mergers and Market Segmentation," Journal of Industrial Economics, Wiley Blackwell, vol. 62(2), pages 229-257, June.
    9. Aaditya Mattoo & Marcelo Olarreaga & Kamal Saggi, 2023. "Mode of foreign entry, technology transfer, and FDI policy," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 25, pages 567-583, World Scientific Publishing Co. Pte. Ltd..
    10. Qiu, Larry D. & Zhou, Wen, 2006. "International mergers: Incentives and welfare," Journal of International Economics, Elsevier, vol. 68(1), pages 38-58, January.
    11. Luis Gautier & Mahelet G. Fikru, 2024. "Mergers in Cournot Markets with Environmental Externality and Product Differentiation," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 21-46, Springer.
    12. Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2013. "Cross-border mergers in vertically related industries," European Economic Review, Elsevier, vol. 59(C), pages 97-108.
    13. Mahelet G. Fikru & Sajal Lahiri, 2013. "Can a Merger Take Place among Symmetric Firms?," Studies in Microeconomics, , vol. 1(2), pages 155-162, December.
    14. James Gaisford & Stefan Lutz, 2007. "A Multi-Product Framework Generating Waves of Mergers and Divestitures," ICER Working Papers 36-2007, ICER - International Centre for Economic Research.
    15. Koska, Onur A., 2019. "Gains from multinational competition for cross-border firm acquisition," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 13, pages 1-19.
    16. repec:ebl:ecbull:v:6:y:2006:i:16:p:1-8 is not listed on IDEAS
    17. Chi, Hsin-Yi & Weng, Tzu-Ching, 2014. "Managerial legal liability and Big 4 auditor choice," Journal of Business Research, Elsevier, vol. 67(9), pages 1857-1869.
    18. Jiajia Cong & Wen Zhou, 2024. "Sequential mergers under incomplete information," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(1), pages 131-154, January.
    19. Hisashi Sawaki, 2015. "Horizontal Mergers Under Asymmetric Information About Synergies," Australian Economic Papers, Wiley Blackwell, vol. 54(3), pages 167-184, September.

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