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Estimating the Potential Gains from Mergers: The Danish Agricultural Extension Services

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  • Bogetoft, Peter
  • Wang, Dexiang

Abstract

We introduce simple non-parametric models to estimate the potential gains from merging production units. Three effects are distinguished. A merger may affect technical efficiency. It also affects the size of the operation which may or may not be advantageous depending on the return to scale properties of the underlying technologies. Lastly, it affects the mix of inputs available and the mix of outputs demanded. A merged unit face more "balanced" or "harmonic" input and output profiles which is typically advantageous. We use the model to estimate the potential gains from merging agricultural extension offices in Denmark.

Suggested Citation

  • Bogetoft, Peter & Wang, Dexiang, 1999. "Estimating the Potential Gains from Mergers: The Danish Agricultural Extension Services," Unit of Economics Working papers 24207, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
  • Handle: RePEc:ags:rvaewp:24207
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    References listed on IDEAS

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    1. Banker, Rajiv D., 1984. "Estimating most productive scale size using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 17(1), pages 35-44, July.
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    4. Peter Bogetoft, 1994. "Incentive Efficient Production Frontiers: An Agency Perspective on DEA," Management Science, INFORMS, vol. 40(8), pages 959-968, August.
    5. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, 1996. "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Center for Financial Institutions Working Papers 96-03, Wharton School Center for Financial Institutions, University of Pennsylvania.
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    7. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
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    9. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
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    12. Peter Bogetoft, 1997. "DEA-based yardstick competition: The optimality of best practice regulation," Annals of Operations Research, Springer, vol. 73(0), pages 277-298, October.
    13. Bogetoft, Peter, 1999. "Process Aggregation and Efficiency," Unit of Economics Working papers 24190, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    14. Niels Christian Petersen, 1990. "Data Envelopment Analysis on a Relaxed Set of Assumptions," Management Science, INFORMS, vol. 36(3), pages 305-314, March.
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