IDEAS home Printed from https://ideas.repec.org/p/ags/rvaewp/24213.html
   My bibliography  Save this paper

Estimating the Potential Gains from Mergers

Author

Listed:
  • Bogetoft, Peter
  • Wang, Dexiang

Abstract

We introduce simple production economic models to estimate the potential gains from mergers. We decompose the gains into technical efficiency, size (scale) and harmony (mix) gains, and we discuss alternative ways to capture these gains. We propose to approximate the production processes using the non-parametric Data Envelopment Analysis (DEA) approach, and we use the resulting operational approach to estimate the potential gains from merging agricultural extension offices in Denmark. Table of Contents: 1. Introduction, 2. Literature, 3. Production Models, 4. Measures of Merger Gains, 5. Decomposing Merger Gains, 6. Alternative Decompositions, 7. The Danish Agricultural Extension Services, 8. Final Remarks, References. Key Words: Data Envelopment Analysis, management, organization, mergers

Suggested Citation

  • Bogetoft, Peter & Wang, Dexiang, 2003. "Estimating the Potential Gains from Mergers," Unit of Economics Working Papers 24213, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    • Handle: RePEc:ags:rvaewp:24213
    DOI: 10.22004/ag.econ.24213
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/24213/files/ew030003.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.24213?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    2. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, "undated". "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Finance and Economics Discussion Series 1997-09, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    3. Dominique Deprins & Léopold Simar & Henry Tulkens, 2006. "Measuring Labor-Efficiency in Post Offices," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 285-309, Springer.
    4. Nilssen, Tore & Sorgard, Lars, 1998. "Sequential horizontal mergers," European Economic Review, Elsevier, vol. 42(9), pages 1683-1702, November.
    5. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
    6. Forsund, Finn R & Hjalmarsson, Lennart, 1979. "Generalised Farrell Measures of Efficiency: An Application to Milk Processing in Swedish Dairy Plants," Economic Journal, Royal Economic Society, vol. 89(354), pages 294-315, June.
    7. Bogetoft, Peter & Fare, Rolf & Obel, Borge, 2006. "Allocative efficiency of technically inefficient production units," European Journal of Operational Research, Elsevier, vol. 168(2), pages 450-462, January.
    8. Peter Bogetoft, 1997. "DEA-based yardstick competition: The optimality of best practice regulation," Annals of Operations Research, Springer, vol. 73(0), pages 277-298, October.
    9. Henry Tulkens, 2006. "On FDH Efficiency Analysis: Some Methodological Issues and Applications to Retail Banking, Courts and Urban Transit," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 311-342, Springer.
    10. Niels Christian Petersen, 1990. "Data Envelopment Analysis on a Relaxed Set of Assumptions," Management Science, INFORMS, vol. 36(3), pages 305-314, March.
    11. Banker, Rajiv D., 1984. "Estimating most productive scale size using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 17(1), pages 35-44, July.
    12. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    13. Bogetoft, Peter, 1995. "Incentives and productivity measurements," International Journal of Production Economics, Elsevier, vol. 39(1-2), pages 67-77, April.
    14. Peter Bogetoft, 1994. "Incentive Efficient Production Frontiers: An Agency Perspective on DEA," Management Science, INFORMS, vol. 40(8), pages 959-968, August.
    15. Peter Bogetoft, 1996. "DEA on Relaxed Convexity Assumptions," Management Science, INFORMS, vol. 42(3), pages 457-465, March.
    16. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
    17. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    18. Kao, Chiang & Chi Yang, Yong, 1992. "Reorganization of forest districts via efficiency measurement," European Journal of Operational Research, Elsevier, vol. 58(3), pages 356-362, May.
    19. Bogetoft, Peter, 1999. "Process Aggregation and Efficiency," Unit of Economics Working Papers 24190, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    20. Charnes, A. & Cooper, W. W. & Rhodes, E., 1979. "Measuring the efficiency of decision-making units," European Journal of Operational Research, Elsevier, vol. 3(4), pages 339-338, July.
    21. Peter Bogetoft, 2000. "DEA and Activity Planning under Asymmetric Information," Journal of Productivity Analysis, Springer, vol. 13(1), pages 7-48, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bogetoft, Peter & Wang, Dexiang, 1999. "Estimating the Potential Gains from Mergers: The Danish Agricultural Extension Services," Unit of Economics Working Papers 24207, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    2. Bogetoft, Peter & Nielsen, Kurt, 2008. "DEA based auctions," European Journal of Operational Research, Elsevier, vol. 184(2), pages 685-700, January.
    3. Peter Bogetoft, 2000. "DEA and Activity Planning under Asymmetric Information," Journal of Productivity Analysis, Springer, vol. 13(1), pages 7-48, January.
    4. Kerstens, Kristiaan & Vanden Eeckaut, Philippe, 1999. "Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit," European Journal of Operational Research, Elsevier, vol. 113(1), pages 206-214, February.
    5. An, Qingxian & Tao, Xiangyang & Chen, Xiaohong, 2023. "Nested frontier-based best practice regulation under asymmetric information in a principal–agent framework," European Journal of Operational Research, Elsevier, vol. 306(1), pages 269-285.
    6. Peter Bogetoft & Joseph M. Tama & Jørgen Tind, 2000. "Convex Input and Output Projections of Nonconvex Production Possibility Sets," Management Science, INFORMS, vol. 46(6), pages 858-869, June.
    7. Peter Bogetoft & Kurt Nielsen, 2002. "DEA Based Yardstick Competition in Natural Resource Management," CIE Discussion Papers 2002-04, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    8. Kuosmanen, Timo, 2001. "DEA with efficiency classification preserving conditional convexity," European Journal of Operational Research, Elsevier, vol. 132(2), pages 326-342, July.
    9. Agrell, Per J. & Niknazar, Pooria, 2014. "Structural and behavioral robustness in applied best-practice regulation," Socio-Economic Planning Sciences, Elsevier, vol. 48(1), pages 89-103.
    10. Jean-Paul Chavas & Kwansoo Kim, 2015. "Nonparametric analysis of technology and productivity under non-convexity: a neighborhood-based approach," Journal of Productivity Analysis, Springer, vol. 43(1), pages 59-74, February.
    11. Fukuyama, Hirofumi & Shiraz, Rashed Khanjani, 2015. "Cost-effectiveness measures on convex and nonconvex technologies," European Journal of Operational Research, Elsevier, vol. 246(1), pages 307-319.
    12. Hennebel, Veerle & Simper, Richard & Verschelde, Marijn, 2017. "Is there a prison size dilemma? An empirical analysis of output-specific economies of scale," European Journal of Operational Research, Elsevier, vol. 262(1), pages 306-321.
    13. Agrell, Per J. & Bogetoft, Peter & Tind, Jorgen, 2000. "Polarity in DEA Models," Unit of Economics Working Papers 24188, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    14. Agrell, Per J. & Bogetoft, Peter & Tind, Jorgen, 2002. "Incentive plans for productive efficiency, innovation and learning," International Journal of Production Economics, Elsevier, vol. 78(1), pages 1-11, July.
    15. Bogetoft, Peter & Fare, Rolf & Obel, Borge, 2006. "Allocative efficiency of technically inefficient production units," European Journal of Operational Research, Elsevier, vol. 168(2), pages 450-462, January.
    16. An, Qingxian & Tao, Xiangyang & Xiong, Beibei & Chen, Xiaohong, 2022. "Frontier-based incentive mechanisms for allocating common revenues or fixed costs," European Journal of Operational Research, Elsevier, vol. 302(1), pages 294-308.
    17. Walheer, Barnabé, 2018. "Scale efficiency for multi-output cost minimizing producers: The case of the US electricity plants," Energy Economics, Elsevier, vol. 70(C), pages 26-36.
    18. An, Qingxian & Tao, Xiangyang & Xiong, Beibei, 2021. "Benchmarking with data envelopment analysis: An agency perspective," Omega, Elsevier, vol. 101(C).
    19. Bogetoft, Peter & Nielsen, Kurt, 2003. "Yardstick Based Procurement Design In Natural Resource Management," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25910, International Association of Agricultural Economists.
    20. Bogetoft, Peter & Leth Hougaard, Jens, 2004. "Super efficiency evaluations based on potential slack," European Journal of Operational Research, Elsevier, vol. 152(1), pages 14-21, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:rvaewp:24213. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/foikudk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.