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Mergers, Investment Decisions and Internal OrganisationAlbert Banal-EstañolUniversitat Pompeu Fabra - Department of Economics and Business (DEB); City University London - Department of Economics Ines Macho-StadlerUniversidad Autonoma de Barcelona; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Jo SeldeslachtsUniversity of Amsterdam; Tinbergen Institute December 2004 CESifo Working Paper Series No. 944; WZB, Markets and Political Economy Working Paper No. SP II 2004-13 Abstract: We analyse the effects of investment decisions and firms' internal organisation on the efficiency and stability of horizontal mergers. In our framework synergies 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 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.
Number of Pages in PDF File: 41 Keywords: Horizontal Mergers, Investment, Efficiency Gains, Internal Conflict JEL Classification: L22, D43 working papers seriesDate posted: June 16, 2003Suggested CitationContact Information
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