Liu, Chih-Chen Mukherjee, Arijit Wang, Leonard F.S.
Year of Publication:
CESifo Working Paper 4996
We show that the presence of a strategic tax policy increases the incentive for a horizontal merger compared to the situation with no tax policy. Thus, we point towards a new factor, viz., strategic tax policy, for increasing the incentive for a horizontal merger that has been ignored in the existing literature. In contrast to the usual belief, we also show that a horizontal merger may benefit the consumers and the society.