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Mergers, Investment Decisions and Internal Organisation

Author

Listed:
  • Albert Banal-Estañol
  • Inés Macho-Stadler
  • Jo Seldeslachts

Abstract

We analyse the effects of investment decisions and firms' internal organisation on the efficiency and stability of horizontal mergers. In our framework economies of scale are endogenous and there might be internal conflict within merged firms. We show that often stable mergers do not lead to more efficiency and may even lead to efficiency losses. These mergers lead to lower total welfare, suggesting that a regulator should be careful in assuming that possible efficiency gains of a merger will be effectively realised. Moreover, the paper offers a possible explanation for merger failures.

Suggested Citation

  • Albert Banal-Estañol & Inés Macho-Stadler & Jo Seldeslachts, 2004. "Mergers, Investment Decisions and Internal Organisation," Working Papers 111, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:111
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    References listed on IDEAS

    as
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    Cited by:

    1. Miguel González-Maestre & Diego Peñarrubia, 2005. "Innovation, merger policy and technology transfer," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 181-201, January.

    More about this item

    Keywords

    Horizontal mergers; investments; efficiency gains; internal conflict;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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