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Mergers, Investment Decisions and Internal Organisation

41 Pages Posted: 16 Jun 2003

See all articles by Albert Banal-Estañol

Albert Banal-Estañol

City University London - Department of Economics; Universitat Pompeu Fabra (UPF) - Department of Economics and Business (DEB)

Ines Macho-Stadler

Universidad Autonoma de Barcelona; Barcelona Graduate School of Economics (Barcelona GSE); CESifo (Center for Economic Studies and Ifo Institute)

Jo Seldeslachts

KU Leuven - Faculty of Business and Economics (FEB); German Institute for Economic Research (DIW Berlin)

Date Written: December 2004

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.

Keywords: Horizontal Mergers, Investment, Efficiency Gains, Internal Conflict

JEL Classification: L22, D43

Suggested Citation

Banal Estañol, Albert and Banal Estañol, Albert and Macho-Stadler, Ines and Seldeslachts, Jo, Mergers, Investment Decisions and Internal Organisation (December 2004). Available at SSRN: https://ssrn.com/abstract=413863 or http://dx.doi.org/10.2139/ssrn.413863

Albert Banal Estañol

City University London - Department of Economics ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

Universitat Pompeu Fabra (UPF) - Department of Economics and Business (DEB) ( email )

Barcelona, 08005
Spain

Ines Macho-Stadler (Contact Author)

Universidad Autonoma de Barcelona ( email )

Departamento de Economia e Historia Economica
08193 Barcelona
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jo Seldeslachts

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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