Cross-border mergers in a mixed oligopoly

Heywood, John and Mcginty, Matthew (2011) Cross-border mergers in a mixed oligopoly. Economic Modelling, 28 (1-2). pp. 382-389. ISSN 0264-9993

Abstract

This paper identifies the unique strategic issues of cross-border mergers in a mixed oligopoly showing that the presence of a welfare maximizing public firm increases the incentive for such mergers. The well-known merger paradox that two-firm mergers are rarely profitable is substantially relaxed in the cases of both linear and convex production costs. The ability to identify profitable two-firm mergers in this context takes on added importance as the recent cross-border merger wave often involved industries with public firms.