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To merge or not to merge: That is the question

Author

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  • Luis Corchón

    ()

  • Ramon Fauli-Oller

    ()

Abstract

In this paper we analyze the implementation of socially optimal mergers when the regulator is not informed about all parameters that determine social and private gains from potential mergers. We show that implementation requires a certain degree of agreement between social and private incentives. The most important example where this congruence is present is when the uncertainty refers to cost savings, because in this case society and firms want costs savings to be as high as possible. Then, it is possible to induce firms to truthfully reveal the costs savings induced by the merger. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Luis Corchón & Ramon Fauli-Oller, 2004. "To merge or not to merge: That is the question," Review of Economic Design, Springer;Society for Economic Design, vol. 9(1), pages 11-30, December.
  • Handle: RePEc:spr:reecde:v:9:y:2004:i:1:p:11-30 DOI: 10.1007/s10058-004-0117-3
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    References listed on IDEAS

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    1. Coughlin, Peter & Nitzan, Shmuel, 1981. "Directional and local electoral equilibria with probabilistic voting," Journal of Economic Theory, Elsevier, vol. 24(2), pages 226-239, April.
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    3. repec:cup:apsrev:v:79:y:1985:i:01:p:62-78_22 is not listed on IDEAS
    4. repec:cup:apsrev:v:62:y:1968:i:01:p:25-42_11 is not listed on IDEAS
    5. McKelvey, Richard D., 1976. "Intransitivities in multidimensional voting models and some implications for agenda control," Journal of Economic Theory, Elsevier, vol. 12(3), pages 472-482, June.
    6. Kramer, Gerald H., 1978. "Robustness of the median voter result," Journal of Economic Theory, Elsevier, vol. 19(2), pages 565-567, December.
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    Citations

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    Cited by:

    1. Corchón, Luis C., 2008. "The theory of implementation : what did we learn?," UC3M Working papers. Economics we081207, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Cosnita, Andreea & Tropeano, Jean-Philippe, 2009. "Negotiating remedies: Revealing the merger efficiency gains," International Journal of Industrial Organization, Elsevier, pages 188-196.

    More about this item

    Keywords

    Merger; antitrust; implementation;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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