Endogenous Merger Waves in Vertically Related Industries

Zhiyong Yao () and Wen Zhou ()
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Wen Zhou: School of Business, The University of Hong Kong

No 11-34, Working Papers from NET Institute

Abstract: We study merger waves in vertically related industries where firms can engage in both vertical and horizontal mergers. Even though any individual merger would have been profitable, firms may refrain from merging for fear of negative impacts from other mergers. When they do merge, however, they always merge in waves, which is either vertical or horizontal depending on the relative intensity of double markup and horizontal competitions in the two industries. Finally, merger waves may happen with or without any fundamental change in the underlying economic conditions.

Keywords: merger wave; horizontal mergers; vertical mergers; stable market structure (search for similar items in EconPapers)
JEL-codes: D43 L13 L42 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011-10
New Economics Papers: this item is included in nep-bec, nep-com, nep-hme and nep-ind
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