Mergers, managerial incentives, and efficiencies

Arbeitspapier

We analyze the effects of synergies from horizontal mergers in a Cournot oligopoly where principals provide their agents with incentives to cut marginal costs prior to choosing output. We stress that synergies come at a cost which possibly leads to a countervailing incentive effect: The merged firm's principal may be induced to stifle managerial incentives in order to reduce her agency costs. Whenever this incentive effect dominates the well-known direct synergy effect, synergies actually reduce consumer surplus which opposes the use of an efficiency defense in merger control.

Object Details

• ISBN: 978-3-86304-087-1
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DICE Discussion Paper ; No. 88 [rev.]

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Economics of Contract: Theory ; Firm Organization and Market Structure ; Monopolization; Horizontal Anticompetitive Practices
• Subject: Managerial Incentives ; Horizontal Mergers ; Merger Control ; Productive Efficiency Gains ; Synergies ; Efficiency Defense

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jovanovic, Dragan
• Event: Veröffentlichung
• (who): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (where): Düsseldorf
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/97501
• Last update: 10.03.2025, 11:43 AM CET