Mergers between regulated firms with unknown efficiency gains

Arbeitspapier

In an industry where regulated firms interact with unregulated suppliers, we investigate the welfare effects of a merger between regulated firms when cost synergies are uncertain before the merger and their realization becomes private information of the merged firm. The optimal merger policy trades off potential cost savings against regulatory distortions from informational problems. We show that, as a consequence of this trade-off, more intense competition in unregulated segments of the market induces a more lenient merger policy. The regulated firms' diversification into a competitive segment of the market can lead to a softer merger policy when competition is weaker.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 464

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Legal Monopolies and Regulation or Deregulation ; Economics of Regulation
• Subject: asymmetric information ; competition ; efficiency gains ; mergers ; regulation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fiocco, Raffaele ; Guo, Gongyu
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2014

Further information

• DOI: doi:10.5282/ubm/epub.20875
• Handle: http://hdl.handle.net/10419/103910
• URN: urn:nbn:de:bvb:19-epub-20875-8
• Last update: 10.03.2025, 11:43 AM CET