Merger Stability in a Cost Asymmetric Industry

Posted by D. Daniel Sokol

Margarida Catalao Lopes Technical University of Lisbon of the Technical University of Lisbon has posted Merger Stability in a Cost Asymmetric Industry.

ABSTRACT: This paper analyzes the formation and stability of mergers involving asymmetric firms, as a function of efficiency differences and fixed cost savings. Mergers are allowed to include any number of participants, out of an n-firm industry. Attention is restricted to individual movements and the focus is on the identity of insiders, with predictions on which mergers are more likely to survive perturbations or estimation errors by proponents and/or by the regulatory authority across the parameter space.