Myopic Mergers across Borders with Incomplete Information in GOLE

Hamid Beladi, Chakrabarti Avik () and Hollas Daniel ()
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Chakrabarti Avik: Department of Economics, University of Wisconsin, Milwaukee, WI, USA
Hollas Daniel: College of Business, University of Texas at San Antonio, San Antonio, TX78249, USA

The B.E. Journal of Economic Analysis & Policy, 2019, vol. 19, issue 4, 4

Abstract: In this paper, we present a tractable general equilibrium model capturing the incentives for myopic mergers in oligopolistic industries with incomplete information about rivals’ costs. We demonstrate that ex-ante gains from myopic mergers between firms with incomplete information about rival’s cost are larger when the difference between unknown components of their costs is wider. We also show that ex-ante gains from myopic mergers between firms across countries with large differences in factor endowments, ceteris paribus, would be greater than the ex-ante gains from mergers between countries with relatively similar factor endowments.

Keywords: Cross-border mergers; General Oligopolistic Equilibrium; Incomplete information; Oligopoly (search for similar items in EconPapers)
JEL-codes: F10 F12 L13 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/bejeap-2019-0281

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