Multi-Firm Mergers with Leaders and Followers
Gamal Atallah ()
No E1501E, Working Papers from University of Ottawa, Department of Economics
This paper analyzes mergers involving several leaders and followers in Stackelberg models, with the merged entity acting as a leader. Adding a follower to a merger increases its profitability or reduces its losses. A merger between one leader and any number of followers is always profitable. When a merger involves two leaders, it requires a sufficiently large proportion of followers to participate in it to be profitable. A merger is less likely to be profitable when the number of participating leaders is intermediate and the number of participating followers is small. All mergers involving leaders and followers are welfare reducing. Overall, Stackelberg leadership partially alleviates the merger paradox.
Keywords: Fusions; Profitabilité des fusions; Paradoxe des fusions; Stackelberg; Meneurs; Suiveurs (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
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