Internal versus External Growth in Industries with Scale Economies
A Computational Model of Optimal Merger Policy
Bibliographic Data
| ID | 10182025 |
|---|---|
| Authors | Ben Mermelstein, Volker Nocke (0000-0002-5000-6828, University of Mannheim), Mark A Satterthwaite, Michael D Whinston (Massachusetts Institute of Technology) |
| Year | 2019 |
| Volume | 128 |
| Issue | 1 |
| Pages | 301-341 |
| Publication date | 2019-04-18 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/704069 |
| OpenAlex | W2998558223 |
| Language | EN |
| Citations received | 1 |
| References cited | 19 |
We study merger policy in a dynamic computational model in which firms can reduce costs through investment or through mergers. Firms invest or propose mergers according to the profitability of these strategies. An antitrust authority can block mergers at some cost. We examine the optimal policy for an antitrust authority that cannot commit to its future policy and approves mergers as they are proposed. We find that the optimal policy can differ substantially from a policy based on static welfare. In general, antitrust policy can greatly affect firms' investment behavior, and firms' investment behavior can greatly affect the optimal antitrust policy
Business · Commit · Economics · Economies of scale · Incentive · Industrial organization · Investment (military · Investment policy · Market economy · Microeconomics · Monetary economics · Profitability index · Welfare · Corporate Finance and Governance · Finance · Firm Innovation and Growth · Merger and Competition Analysis
| Highly cited | No |
|---|