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Myopic Mergers across Borders with Incomplete Information in GOLE

In this paper, we present a tractable general equilibrium model capturing the incentives for myopic mergers in oligopolistic industries with incomplete information about rivals’ costs. We demonstrate that gains from myopic mergers between firms with incomplete information about rival’s cost are larg...

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Bibliographic Details
Published in:The B.E. journal of economic analysis & policy 2019-10, Vol.19 (4)
Main Authors: Beladi, Hamid, Chakrabarti, Avik, Hollas, Daniel
Format: Article
Language:English
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Summary:In this paper, we present a tractable general equilibrium model capturing the incentives for myopic mergers in oligopolistic industries with incomplete information about rivals’ costs. We demonstrate that gains from myopic mergers between firms with incomplete information about rival’s cost are larger when the difference between unknown components of their costs is wider. We also show that gains from myopic mergers between firms across countries with large differences in factor endowments, , would be greater than the gains from mergers between countries with relatively similar factor endowments.
ISSN:2194-6108
1935-1682
DOI:10.1515/bejeap-2019-0281