Interindustry Takeover, Economies of Scope, and Takeover Premia

Chongwoo Choe and Chander Shekhar
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Chander Shekhar: Department of Economics and Finance, La Trobe University

No 1997.09, Working Papers from School of Economics, La Trobe University

Abstract: The existence of takeover premia is well established in the finance literature. This research motivates the existence of premia by utilising the concept of economies of scope which are empirically proxied by the 'closeness' of industries, and subsequently provides a theoretical framework for the analysis. Potential takeover premia are shown to exist under standard conditions of Cournot competition for firms which operate in two related industries and for whom the products are considered to be strategic substitutes.

Keywords: Oligopolies.; Financial; Market; EDIRC; Provider-Institution:; RePEc:edi:smlatau (search for similar items in EconPapers)
Pages: 16 pages
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ltr:wpaper:1997.09

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