The Incentives for Takeover in Oligopoly

Roman Inderst and Christian Wey

No 423, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

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 .rms 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.

Keywords: Takeover bidding; Merger incentives; Oligopoly (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 (search for similar items in EconPapers)
Pages: 24 p.
Date: 2004
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (23)

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Related works:
Journal Article: The incentives for takeover in oligopoly (2004)
Working Paper: The Incentives for Takeover in Oligopoly (2002)
Working Paper: The Incentives for Takeover in Oligopoly (2001)
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