Should Mergers be Controlled?

Arbeitspapier

Anticompetitive mergers benefit competitors more than the merging firms. We show that such externalities reduce firms' incentives to merge (a holdup mechanism). Firms delay merger proposals, thereby foregoing valuable profits and hoping other firms will merge instead - a war of attrition. The final result, however, is an overly concentrated market. We also demonstrate a surprising intertemporal link: Merger incentives may be reduced by the prospect of additional profitable mergers in the future. Merger control may help protect competition. Holdup and intertemporal links make policy design more difficult, however. Even reasonable policies may be worse than not controlling mergers at all.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IUI Working Paper ; No. 541

Classification and Topics

• Classification: Wirtschaft ; Bargaining Theory; Matching Theory ; Monopoly; Monopolization Strategies ; Monopolization; Horizontal Anticompetitive Practices
• Subject: Endogenous Mergers & Acquisitions ; Coalition Formation ; Competition Policy ; Fusionskontrolle ; Unternehmenskooperation ; Externer Effekt ; Wettbewerb ; Unternehmenskonzentration ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fridolfsson, Sven-Olof ; Stennek, Johan
• Event: Veröffentlichung
• (who): The Research Institute of Industrial Economics (IUI)
• (where): Stockholm
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/94859
• Last update: 10.03.2025, 11:45 AM CET