IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-00466300.html
   My bibliography  Save this paper

Asset Divestitures and Horizontal Mergers: An N-Firm Cournot Story

Author

Listed:
  • Patrice Bougette

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

Abstract

This paper aims to analyze the effectiveness of asset transfers in preventing unilateral effects of a merger. By generalizing market size and the number of merging firms while maintaining quantity competition from previous literature, we show that asset divestitures still allow the remedying of certain price increases. Market size negatively impacts the optimal share to divest. On the other hand, the divestiture share increases with the number of merging firms. In spite of the required asset sale, parties' profitability will remain ensured in most cases. Buyers always make profit from their purchase if industry fixed costs are rather low. We also add the alternative of a second buyer and compare outcomes with both consumer and welfare standards. Furthermore, as many mergers lead to efficiency gains, we'll integrate specific cost synergies and show that the higher synergies, the smaller the divestiture share. Lastly, we show that setting up a business from just the divested assets (carve-out) is bound to fail if firms' technology remain the same.

Suggested Citation

  • Patrice Bougette, 2008. "Asset Divestitures and Horizontal Mergers: An N-Firm Cournot Story," Post-Print halshs-00466300, HAL.
    • Handle: RePEc:hal:journl:halshs-00466300
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00466300. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.