Working Paper No. 694

Anti- versus Pro-Competitive Mergers

Published: 5 februari 2007Pages: 43Keywords: Anti- and Pro-Competitive Mergers; Consumers' Welfare; Coalition Formation; Endogenous Split of SurplusJEL-codes: L12; L13; L41

Anti- versus Pro-Competitive Mergers Sven-Olof Fridolfsson


In a framework where mergers are mutually excluding, I show that firms pursue anti- rather than (alternative) pro-competitive mergers. Potential outsiders to anti-competitive mergers refrain from pursuing pro-competitive mergers if the positive externalities from anti-competitive mergers are strong enough. Potential outsiders to pro-competitive mergers pursue anti-competitive mergers if the negative externalities from the pro-competitive mergers are strong enough. Potential participants in anti-competitive mergers are cheap targets due to the risk of becoming outsiders to pro-competitive mergers. Firms may even pursue an unprofitable and anti-competitive merger, when alternative mergers are profitable and pro-competitive.

 

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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