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The merger paradox in a mixed oligopoly

Artz, Benjamin and Heywood, John and Mcginty, Matthew (2009) The merger paradox in a mixed oligopoly. Research in Economics, 63 (1). pp. 1-10. ISSN 1090-9443

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Abstract

This paper examines the set of surplus maximizing mergers in a model of mixed oligopoly. The presence of a welfare maximizing public firm reduces the set of mergers for which two private firms can profitably merge. When a public firm and private firm merge, the changes in welfare and profit depend on the resulting extent of private ownership in the newly merged firm. When the government sets that share to maximize post merger welfare as assumed in the privatization literature, the merger paradox will often remain and the merger will not take place. Yet, we show there always exists scope for mergers that increase profit and increase (if not maximize) welfare. Interestingly, these mergers often include complete privatization.

Item Type: Article
Journal or Publication Title: Research in Economics
Uncontrolled Keywords: Merger paradox ; Mixed oligopoly ; Convex costs
Subjects:
Departments: Lancaster University Management School > Economics
ID Code: 64921
Deposited By: ep_importer_pure
Deposited On: 10 Jun 2013 19:56
Refereed?: Yes
Published?: Published
Last Modified: 24 Nov 2017 05:18
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/64921

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