Horizontal mergers with synergies: Cash vs. profit-share auctions |
| |
| Authors: | Wei Ding Cuihong Fan Elmar G. Wolfstetter |
| |
| Affiliation: | 1. Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24-42, 53113 Bonn, Germany;2. Shanghai University of Finance and Economics, School of Economics, Guoding Road 777, 200433 Shanghai, China;3. Institute of Economic Theory I, Humboldt University at Berlin, Spandauer Str. 1, 10178 Berlin, Germany;4. Dept. of Economics, Korea University, Seoul, Republic of Korea |
| |
| Abstract: | We consider takeover bidding in a Cournot oligopoly when firms have private information concerning the synergy effect of merging with a takeover target and bidders can influence rivals' beliefs through their bids. We compare cash and profit-share auctions, first- and second-price, supplemented by entry fees. Since non-merged firms benefit from a merger if synergies are low, bidders are subject to a positive externality with positive probability; nevertheless, pooling does not occur. Unlike cash auctions, profit-share auctions are not revenue equivalent, and the second-price profit-share auction is more profitable than the other auctions. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
