To Merge or Not to Merge: That is the Question

CEPR Working Paper No. 2190

Posted: 17 Sep 1999

See all articles by Luis C. Corchón

Luis C. Corchón

Charles III University of Madrid - Department of Economics

Ramon Fauli-Oller

Universidad de Alicante - Department of Economic Analysis; Centre for Economic Policy Research (CEPR)

Date Written: July 1999

Abstract

In this paper we analyze the implementation of socially optimal mergers when the regulator is not informed about the parameters that determine social and private gains from potential mergers. We find that most of the standard tools in dominant strategy implementation, like the revelation principle or the Vickrey Clarke-Groves mechanism can not be applied in our framework. We show that implementation in dominant strategies of the optimal merger policy without budget balance is possible under an additional assumption. The same assumption makes possible the implementation in Nash equilibrium of the optimal merger policy with budget balance.

JEL Classification: L11

Suggested Citation

Corchón Diaz, Luis Carlos and Fauli-Oller, Ramon, To Merge or Not to Merge: That is the Question (July 1999). CEPR Working Paper No. 2190, Available at SSRN: https://ssrn.com/abstract=177008

Luis Carlos Corchón Diaz (Contact Author)

Charles III University of Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain

Ramon Fauli-Oller

Universidad de Alicante - Department of Economic Analysis ( email )

E-03080 Alicante
Spain
+34 96 590 3400 (Phone)
+34 96 590 3614 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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