Managerial delegation and merger incentives

Odd Rune Straume

No 04/03, Working Papers in Economics from University of Bergen, Department of Economics

Abstract: We analyse how the internal organisation of firms affects the correspondence between private and social incentives for horizontal merger. Applying a model of endogenous merger formation in a three-firm asymmetric Cournot industry, we contrast the cases of entrepreneurial and managerial firms. The use of strategic delegation increases both the probability that a merger takes place and the likelihood that the ‘wrong’ type of merger is undertaken, from a viewpoint of social welfare. This suggests that managerial delegation increases the scope for antitrust policy.

Keywords: Managerial delegation; Endogenous mergers; Cost asymmetry; Antitrust policy. (search for similar items in EconPapers)
JEL-codes: D21 D43 L11 L21 L41 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2003-01-07
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:bergec:2003_004

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