Takeover Waves

Ramon Faulí‐Oller

51 citations0/0 files storedJournal of Economics & Management Strategy

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Merger and Competition Analysis Corporate Finance and Governance Law, Economics, and Judicial Systems

Abstract

Horizontal takeovers often occur in waves. A sequence of takeovers is obtained in a Cournot setting with cost asymmetries. They are motivated by two different reasons: (1) a low realization of demand increases the profitability of takeovers; (2) takeovers raise the profitability of future takeovers. A possible explanation of merger races is also obtained by showing that firms buying in the first place pay a lower price for their targets.

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References

1983Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium 1985Incentives to Form Coalitions with Bertrand Competition 1985On the efficiency of Bertrand and Cournot equilibria with product differentation 1990The Limits of Monopolization Through Acquisition 1998Sequential horizontal mergers 1989Horizontal mergers in declining industries 1997On merger profitability in a Cournot setting 1989Are mergers and acquisitions going to be popular in Japan too?

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2007Cross-Border Mergers as Instruments of Comparative Advantage

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