To Merge or to License: Implications of Information Sharing for Optimal Merger Policy

21 Pages Posted: 20 Jun 2013  

Shiou Shieh

National Taipei University - Department of Economics

Chi-Fei Huang

National Taipei University

Hsiao-Chi Chen

National Taipei University - Department of Economics

Date Written: July 2013

Abstract

We investigate the antitrust authority's optimal merger policy in a duopoly model with cost asymmetry and asymmetric information regarding uncertain demand. Technology can be transferred either through a merger or a license, while market information is shared only through a merger. We show that the optimal merger policy differs under Cournot and Bertrand competition. If firms compete in Bertrand fashion, then mergers should never be allowed. If firms compete in Cournot fashion, then mergers are permitted if market volatility is high or if volatility is in the intermediate range and the size of innovations is large enough.

Suggested Citation

Shieh, Shiou and Huang, Chi-Fei and Chen, Hsiao-Chi, To Merge or to License: Implications of Information Sharing for Optimal Merger Policy (July 2013). The Manchester School, Vol. 81, Issue 4, pp. 599-619, 2013. Available at SSRN: https://ssrn.com/abstract=2282327 or http://dx.doi.org/10.1111/j.1467-9957.2012.02301.x

Shiou Shieh (Contact Author)

National Taipei University - Department of Economics ( email )

No. 67, Section 3, Ming-Shang E. Road
Taipei 104
Taiwan
+886-2-25009127 (Phone)
+886-2-27853946 (Fax)

HOME PAGE: http://web.ntpu.edu.tw/~sshieh/data/Vitae/Vitae.pdf

Chi-Fei Huang

National Taipei University

Dept. of Finance
Taipei, Taiwan 100
Taiwan

Hsiao-Chi Chen

National Taipei University - Department of Economics ( email )

Dept. of Finance
Taipei, Taiwan 100
Taiwan

Paper statistics

Downloads
0
Abstract Views
261