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Article: Large is beautiful: Horizontal mergers for better exploitation of production shocks

TitleLarge is beautiful: Horizontal mergers for better exploitation of production shocks
Authors
Issue Date2008
Citation
Journal Of Industrial Economics, 2008, v. 56 n. 1, p. 68-93 How to Cite?
AbstractThe profitability of horizontal mergers is investigated in a situation in which firms face a production shock and therefore are uncertain about their future costs. I show that, due to production rationalization, small-scale mergers can be profitable if the uncertainty is large. The efficiency gain in production also implies benign welfare consequences. Under cost uncertainty, a profitable merger always improves social welfare if no more than half of the industry's firms are allowed to merge. Finally, I show that the incentives to merge depend on the information structure. Firms are less likely to merge when they possess more information. © 2008 Blackwell Publishing Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/177999
ISSN
2015 Impact Factor: 1.058
2015 SCImago Journal Rankings: 1.452
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorZhou, Wen_US
dc.date.accessioned2012-12-19T09:41:13Z-
dc.date.available2012-12-19T09:41:13Z-
dc.date.issued2008en_US
dc.identifier.citationJournal Of Industrial Economics, 2008, v. 56 n. 1, p. 68-93en_US
dc.identifier.issn0022-1821en_US
dc.identifier.urihttp://hdl.handle.net/10722/177999-
dc.description.abstractThe profitability of horizontal mergers is investigated in a situation in which firms face a production shock and therefore are uncertain about their future costs. I show that, due to production rationalization, small-scale mergers can be profitable if the uncertainty is large. The efficiency gain in production also implies benign welfare consequences. Under cost uncertainty, a profitable merger always improves social welfare if no more than half of the industry's firms are allowed to merge. Finally, I show that the incentives to merge depend on the information structure. Firms are less likely to merge when they possess more information. © 2008 Blackwell Publishing Ltd.en_US
dc.languageengen_US
dc.relation.ispartofJournal of Industrial Economicsen_US
dc.titleLarge is beautiful: Horizontal mergers for better exploitation of production shocksen_US
dc.typeArticleen_US
dc.identifier.emailZhou, W: wzhou@hkucc.hku.hken_US
dc.identifier.authorityZhou, W=rp01128en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1111/j.1467-6451.2008.00333.xen_US
dc.identifier.scopuseid_2-s2.0-42149116837en_US
dc.identifier.hkuros146797-
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-42149116837&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume56en_US
dc.identifier.issue1en_US
dc.identifier.spage68en_US
dc.identifier.epage93en_US
dc.identifier.eissn1467-6451-
dc.identifier.isiWOS:000254953300004-
dc.publisher.placeUnited Kingdomen_US
dc.identifier.scopusauthoridZhou, W=10739745800en_US
dc.identifier.citeulike2674884-

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