Download this Paper Open PDF in Browser

Sweetening the Pill: A Theory of Waiting To Merge

41 Pages Posted: 18 Aug 2008 Last revised: 15 Jul 2017

Eileen Fumagalli


Tore Nilssen

University of Oslo - Department of Economics

Date Written: July 12, 2017


Merger policy is a permission-granting activity by government in which there may be disincentives to seek permission because of the benefit from having other firms merge. We set up a sequential merger game with endogenized antitrust policy to study these disincentives. In particular, we delineate a pill-sweetening motive for waiting to merge: a firm may choose to let other firms move first, in order to get more mergers approved. We report the prevalence of this and other motives for not merging at once and find it to hinge on efficiency gains from a merger, differently-sized firms, firms' production technology, the presence of an antitrust authority, and the alignment of interests between antitrust authorities and firms.

Keywords: Mergers, Antitrust policy

JEL Classification: L11, L13, L41, G34

Suggested Citation

Fumagalli, Eileen and Nilssen, Tore, Sweetening the Pill: A Theory of Waiting To Merge (July 12, 2017). Available at SSRN: or

Eileen Fumagalli

Konkurransetilsynet ( email )

P.O. Box 439 Sentrum
NO- 5805 Bergen
+47 55 59 75 33 (Phone)

Tore Nilssen (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo

Paper statistics

Abstract Views