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Waiting to Merge

Author

Listed:
  • Fumagalli, Eileen

    (IEFE, Università Bocconi, Milan)

  • Nilssen, Tore

    (Dept. of Economics, University of Oslo)

Abstract

We set up a sequential merger to study a firm's incentives to pass up on an opportunity to merge with another firm. We find that such incentives may exist when there are efficiency gains from a merger, firms are of different sizes, there is an anthitrust authority present to approve mergers, and there is sufficient alignment of interests between the antitrust authority and the firms. We point out three dstinctive motives for not merging: the external-effect motive, the bargaining-power motive, and the pill-sweetening motive.

Suggested Citation

  • Fumagalli, Eileen & Nilssen, Tore, 2008. "Waiting to Merge," Memorandum 13/2008, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2008_013
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    File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2008/Memo-13-2008.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Mariana Cunha & Hélder Vasconcelos, 2018. "Sequential Mergers and Antitrust Authority’s Decisions in Stackelberg Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(3), pages 373-394, September.
    2. Robin Kleer, 2009. "Acquisitions in a Patent Contest Model with Large and Small Firms," Journal of Industry, Competition and Trade, Springer, vol. 9(4), pages 307-328, December.
    3. Andonova, Veneta & Rodriguez, Yeny & Sanchez, Ivan Dario, 2013. "When waiting is strategic: Evidence from Colombian M&As 1995–2008," Journal of Business Research, Elsevier, vol. 66(10), pages 1736-1742.

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    More about this item

    Keywords

    Mergers; merger incentives;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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