Abstract

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The Dynamics of Mergers and Acquisitions in Oligopolistic Industries


Jianjun Miao


Boston University - Department of Economics

Dirk Hackbarth


Boston University School of Management

November 30, 2011

Journal of Economic Dynamics and Control, Forthcoming
EFA 2007 Ljubljana Meetings Paper

Abstract:     
This article embeds an oligopolistic industry structure in a real options framework in which synergy gains of horizontal mergers arise endogenously and vary stochastically over time. We find that (i) mergers are more likely in more concentrated industries; (ii) mergers are more likely in industries that are more exposed to industrywide shocks; (iii) returns to merger and rival firms arising from restructuring are higher in more concentrated industries; (iv) increased industry competition delays the timing of mergers; (v) in sufficiently concentrated industries, bidder competition induces a bid premium that declines with product market competition; and (vi) mergers are more likely and yield larger returns in industries with higher dispersion in firm size.

Number of Pages in PDF File: 48

Keywords: anticompetitive effect, industry structure, real options, takeovers

JEL Classification: G13, G14, G31, G34

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Date posted: March 5, 2008 ; Last revised: February 15, 2012

Suggested Citation

Miao, Jianjun and Hackbarth, Dirk, The Dynamics of Mergers and Acquisitions in Oligopolistic Industries (November 30, 2011). Journal of Economic Dynamics and Control, Forthcoming; EFA 2007 Ljubljana Meetings Paper. Available at SSRN: http://ssrn.com/abstract=968870 or http://dx.doi.org/10.2139/ssrn.968870

Contact Information

Jianjun Miao (Contact Author)
Boston University - Department of Economics ( email )
270 Bay State Road
Boston, MA 02215
United States
617-353-6675 (Phone)
HOME PAGE: http://people.bu.edu/miaoj
Dirk Hackbarth
Boston University School of Management ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
(617) 358-4206 (Phone)
(617) 353-6667 (Fax)
HOME PAGE: http://people.bu.edu/dhackbar/
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