The merger paradox in a mixed oligopoly
This paper examines the set of surplus maximizing mergers in a model of mixed oligopoly. The presence of a welfare maximizing public firm reduces the set of mergers for which two private firms can profitably merge. When a public firm and private firm merge, the changes in welfare and profit depend on the resulting extent of private ownership in the newly merged firm. When the government sets that share to maximize post merger welfare as assumed in the privatization literature, the merger paradox will often remain and the merger will not take place. Yet, we show there always exists scope for mergers that increase profit and increase (if not maximize) welfare. Interestingly, these mergers often include complete privatization.
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.:
- Bárcena Ruiz, Juan Carlos & Garzón San Felipe, María Begoña, 2000.
"Mixed Duopoly, Merger and Multiproduct Firms,"
2000-10, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
- Huck, Steffen & Konrad, Kai A. & Müller, Wieland, 2001.
"Profitable horizontal mergers without cost advantages: The role of internal organization, information, and market structure,"
Discussion Papers, various Research Units
FS IV 01-05, Social Science Research Center Berlin (WZB).
- Steffen Huck & Kai A. Konrad & Wieland Müller, 2004. "Profitable Horizontal Mergers without Cost Advantages: The Role of Internal Organization, Information and Market Structure," Economica, London School of Economics and Political Science, vol. 71(284), pages 575-587, November.
- Steffen Huck & Kai A. Konrad & Wieland Müller, 2001. "Profitable Horizontal Mergers without Cost Advantages: The Role of Internal Organization, Information, and Market Structure," CESifo Working Paper Series 435, CESifo Group Munich.
- Huck, S. & Konrad, K.A. & Müller, W., 2004. "Profitable horizontal mergers without cost advantage : The role of intenal organization, information and market structure," Other publications TiSEM 028203f3-7fb8-485a-9701-f, Tilburg University, School of Economics and Management.
- Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
- de Fraja, Giovanni & Delbono, Flavio, 1990. " Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
- Li, Changying, 2006. "Location choice in a mixed oligopoly," Economic Modelling, Elsevier, vol. 23(1), pages 131-141, January.
- Garzón San Felipe, María Begoña & Bárcena Ruiz, Juan Carlos, 2001.
"International Trade and Strategic Privatization,"
2001-07, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
- Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, 02.
- Huck, Steffen & Konrad, Kai A. & Muller, Wieland, 2001. "Big fish eat small fish: on merger in Stackelberg markets," Economics Letters, Elsevier, vol. 73(2), pages 213-217, November.
- Chaim Fershtman & Kenneth L Judd, 1984.
"Equilibrium Incentives in Oligopoly,"
642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Rothschild, R. & Heywood, John S. & Monaco, Kristen, 2000. "Spatial price discrimination and the merger paradox," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 491-506, September.
- John S. Heywood & Matthew Mcginty, 2007. "Convex Costs And The Merger Paradox Revisited," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 342-349, 04.
- Farrell, J. & Shapiro, C., 1988.
"Horizontal Mergers: An Equilibrium Analysis,"
17, Princeton, Woodrow Wilson School - Discussion Paper.
- Joseph Farrell and Carl Shapiro., 1988. "Horizontal Mergers: An Equilibrium Analysis," Economics Working Papers 8880, University of California at Berkeley.
- Farrell, Joseph & Shapiro, Carl, 1988. "Horizontal Mergers: An Equilibrium Analysis," Department of Economics, Working Paper Series qt0tp305nx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Anthony Creane & Carl Davidson, 2004. "Multidivisional firms, internal competition, and the merger paradox," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 951-977, November.
- Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
- James D. Reitzes & David T. Levy, 1995. "Price Discrimination and Mergers," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 427-36, May.
- repec:tpr:qjecon:v:98:y:1983:i:2:p:185-99 is not listed on IDEAS
- Barros, Fatima, 1995. "Incentive schemes as strategic variables: An application to a mixed duopoly," International Journal of Industrial Organization, Elsevier, vol. 13(3), pages 373-386, September.
- Ali Dadpay & John S. Heywood, 2006. "Mixed Oligopoly In A Single International Market ," Australian Economic Papers, Wiley Blackwell, vol. 45(4), pages 269-280, December.
- Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-27, March.
- Daughety, Andrew F, 1990. "Beneficial Concentration," American Economic Review, American Economic Association, vol. 80(5), pages 1231-37, December.
- Jacques, Armel, 2004. "Endogenous timing in a mixed oligopoly: a forgotten equilibrium," Economics Letters, Elsevier, vol. 83(2), pages 147-148, May.
- Noriaki Matsushima & Toshihiro Matsumura, 2003. "Mixed oligopoly and spatial agglomeration," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 62-87, February.
- Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, Southern Economic Association, vol. 65(2), pages 264-281, October.
- Lily Jiang, 2006. "Welfare Analysis Of Privatization In A Mixed Market With Bargaining," Contemporary Economic Policy, Western Economic Association International, vol. 24(3), pages 395-406, 07.
When requesting a correction, please mention this item's handle: RePEc:eee:reecon:v:63:y:2009:i:1:p:1-10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.