- DELEGATION AND ENDOGENOUS MERGERS IN OLIGOPOLY

Javier M. López Cuñat and Miguel González-Maestre
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Javier M. López Cuñat: Universidad de Alicante
Authors registered in the RePEc Author Service: Javier Mateo López-Cuñat

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper we consider the interactions between the use of strategic delegation and mergers in the context of a Cournot oligopoly with linear demand and cost functions. It is assumed that, after the merging process is completed, the owner of every independent firm decides its managerial incentive for his manager. In the context of endogenous mergers through acquisitions, we show that the incentive to merge, under delegation, is considerably increased with respect to the setting without delegation. In fact, we prove that the level of welfare in the setting with delgation is, in some cases, lower than the corresponding under non delegation.

Keywords: Strategic delegation; endoqenous mergers; cournot oligopoly (search for similar items in EconPapers)
Pages: 23 pages
Date: 1999-02
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Citations: View citations in EconPapers (3)

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