Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/18160 
Year of Publication: 
2004
Series/Report no.: 
DIW Discussion Papers No. 423
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
We present a model of takeover where the target optimally sets its reserve price. Under relatively standard symmetry restrictions, we obtain a unique equilibrium. The probability of takeover is only a function of the number of firms and of the insiders' share of total industry gains due to the increase in concentration. Our main application is to the linear Cournot and Bertrand models. A takeover is more likely under Bertrand competition if goods are substitutes and more likely under Cournot competition if goods are complements.
Subjects: 
Takeover bidding
Merger incentives
Oligopoly
JEL: 
L13
D43
L41
Document Type: 
Working Paper

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