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Cross-border mergers in a mixed oligopoly

  • Heywood, John S.
  • McGinty, Matthew

This paper identifies the unique strategic issues of cross-border mergers in a mixed oligopoly showing that the presence of a welfare maximizing public firm increases the incentive for such mergers. The well-known merger paradox that two-firm mergers are rarely profitable is substantially relaxed in the cases of both linear and convex production costs. The ability to identify profitable two-firm mergers in this context takes on added importance as the recent cross-border merger wave often involved industries with public firms.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 1 ()
Pages: 382-389

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:1:p:382-389
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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