Mergers, managerial incentives, and efficiencies
No 88 [rev.], DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
We analyze the effects of synergies from horizontal mergers in a Cournot oligopoly where principals provide their agents with incentives to cut marginal costs prior to choosing output. We stress that synergies come at a cost which possibly leads to a countervailing incentive effect: The merged firm's principal may be induced to stifle managerial incentives in order to reduce her agency costs. Whenever this incentive effect dominates the well-known direct synergy effect, synergies actually reduce consumer surplus which opposes the use of an efficiency defense in merger control.
Keywords: Managerial Incentives; Horizontal Mergers; Merger Control; Productive Efficiency Gains; Synergies; Efficiency Defense (search for similar items in EconPapers)
JEL-codes: D21 D86 L22 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-eff, nep-hrm and nep-ind
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Working Paper: Mergers, managerial incentives, and efficiencies (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:88r
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