Delegation and mergers in oligopoly

  1. González-Maestre, Miguel
  2. López Cuñat, Javier M.
Revista:
Working papers = Documentos de trabajo: Serie AD

Año de publicación: 1999

Número: 3

Tipo: Documento de Trabajo

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Resumen

In this paper we analyze the effect strategic delegation on the profitability of mergers in the context of a Cournot oligopoly with linear demand and cost functions. It is assumed that, after the merging process is completed, the owner of every independent firm decides its managerial incentive for his manager. We show that the required fraction of merging firms for a merger to be profitable, in our model with delegation, is substantially smaller that without delegation.

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