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A general analysis of sequential merger games with an application to cross-border mergers

Salvo, Alberto (2004) A general analysis of sequential merger games with an application to cross-border mergers. EI, 36. Suntory and Toyota International Centres for Economics and Political Science, London School of Economics and Political Science, London, UK.

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Abstract

This paper seeks to uncover why the pattern of equilibria in sequential merger games of a certain type is similar across a fairly wide class of models much studied in the literature. By developing general conditions characterising each element of the set of possible equilibria, I show that the solution to models that satisfy a certain sufficient condition will be restricted to the same subset of equilibria. This result is of empirical relevance in that the pattern of equilibria obtained for this wide class of models is associated with mergers not happening in isolation but rather bunching together. I extend the results to the analysis of cross-border mergers, studying two standard models that satisfy the sufficient condition --Sutton's (1991) vertically-differentiated oligopoly and Perry and Porter's (1985) fixed-supply-of-capital model.

Item Type: Monograph (Discussion Paper)
Official URL: http://sticerd.lse.ac.uk
Additional Information: © 2004 Alberto Salvo
Library of Congress subject classification: H Social Sciences > HF Commerce
H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
D - Microeconomics > D4 - Market Structure and Pricing > D43 - Oligopoly and Other Forms of Market Imperfection
Sets: Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 36
Date Deposited: 08 Jul 2008 15:37
URL: http://eprints.lse.ac.uk/6732/

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