Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97501
Authors: 
Jovanovic, Dragan
Year of Publication: 
2014
Series/Report no.: 
DICE Discussion Paper 88 [rev.]
Abstract: 
We analyze the effects of synergies from horizontal mergers in a Cournot oligopoly where principals provide their agents with incentives to cut marginal costs prior to choosing output. We stress that synergies come at a cost which possibly leads to a countervailing incentive effect: The merged firm's principal may be induced to stifle managerial incentives in order to reduce her agency costs. Whenever this incentive effect dominates the well-known direct synergy effect, synergies actually reduce consumer surplus which opposes the use of an efficiency defense in merger control.
Subjects: 
Managerial Incentives
Horizontal Mergers
Merger Control
Productive Efficiency Gains
Synergies
Efficiency Defense
JEL: 
D21
D86
L22
L41
ISBN: 
978-3-86304-087-1
Document Type: 
Working Paper

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