Asymmetric Information, Bargaining, and International Mergers

Satya Das () and Sarbajit Sengupta

Journal of Economics & Management Strategy, 2001, vol. 10, issue 4, 565-590

Abstract: The formation of international mergers is examined in the presence of two kinds of asymmetric information, one when a local firm has private information on market size and the other when a foreign firm has private information on its technology. In each situation, parametric configurations are identified under which a merger offer may or may not be made. It also examines the kind of offer and the probability of its acceptance. The likelihood of a merger beingformed is also related to the basic market size, demand uncertainty, and cost uncertainty. Welfare effects of tax/subsidy policies by the host country are also analyzed.

Date: 2001
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