Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103904
Authors: 
Fan, Cuihong
Wolfstetter, Elmar G.
Year of Publication: 
2014
Series/Report no.: 
SFB/TR 15 Discussion Paper 478
Abstract: 
According to the well-known "merger paradox", in a Cournot market game mergers are generally unprofitable unless most firms merge. The present paper proposes an optimal merger mechanism. With this mechanism mergers are never unprofitable, more profitable than in other known mechanism, and in many cases welfare increasing. The proposed mechanism assumes that merged firms continue to operate as independent subsidiaries that are rewarded according to a simple and commonly observed relative performance measure.
Subjects: 
Mergers
multi-divisional firms
tournaments
industrial organization
JEL: 
L00
D4
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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