Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95010
Authors: 
Lindqvist, Tobias
Stennek, Johan
Year of Publication: 
2001
Series/Report no.: 
IUI Working Paper 563
Abstract: 
This paper tests the insiders' dilemma hypothesis in a laboratory experiment. The insiders' dilemma means that a profitable merger does not occur, because it is even more profitable for each firm to unilaterally stand as an outsider (Kamien and Zang, 1990 and 1993). The experimental data provides support for the insiders' dilemma, and thereby for endogenous rather than exogenous merger theory. More surprisingly, our data suggests that fairness considerations also make profitable mergers difficult. Mergers that should occur in equilibrium do not, since they require an unequal split of surplus.
Subjects: 
Coalition Formation
Experiment
Insiders' Dilemma
Mergers
Antitrust
JEL: 
C78
C92
G34
L13
L41
Document Type: 
Working Paper

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