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- Publisher Website: 10.1111/j.1467-6451.2008.00333.x
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Article: Large is beautiful: Horizontal mergers for better exploitation of production shocks
Title | Large is beautiful: Horizontal mergers for better exploitation of production shocks |
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Authors | |
Issue Date | 2008 |
Citation | Journal Of Industrial Economics, 2008, v. 56 n. 1, p. 68-93 How to Cite? |
Abstract | The 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 Identifier | http://hdl.handle.net/10722/177999 |
ISSN | 2023 Impact Factor: 1.7 2023 SCImago Journal Rankings: 0.792 |
ISI Accession Number ID | |
References |
DC Field | Value | Language |
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dc.contributor.author | Zhou, W | en_US |
dc.date.accessioned | 2012-12-19T09:41:13Z | - |
dc.date.available | 2012-12-19T09:41:13Z | - |
dc.date.issued | 2008 | en_US |
dc.identifier.citation | Journal Of Industrial Economics, 2008, v. 56 n. 1, p. 68-93 | en_US |
dc.identifier.issn | 0022-1821 | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/177999 | - |
dc.description.abstract | The 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.language | eng | en_US |
dc.relation.ispartof | Journal of Industrial Economics | en_US |
dc.title | Large is beautiful: Horizontal mergers for better exploitation of production shocks | en_US |
dc.type | Article | en_US |
dc.identifier.email | Zhou, W: wzhou@hkucc.hku.hk | en_US |
dc.identifier.authority | Zhou, W=rp01128 | en_US |
dc.description.nature | link_to_subscribed_fulltext | en_US |
dc.identifier.doi | 10.1111/j.1467-6451.2008.00333.x | en_US |
dc.identifier.scopus | eid_2-s2.0-42149116837 | en_US |
dc.identifier.hkuros | 146797 | - |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-42149116837&selection=ref&src=s&origin=recordpage | en_US |
dc.identifier.volume | 56 | en_US |
dc.identifier.issue | 1 | en_US |
dc.identifier.spage | 68 | en_US |
dc.identifier.epage | 93 | en_US |
dc.identifier.eissn | 1467-6451 | - |
dc.identifier.isi | WOS:000254953300004 | - |
dc.publisher.place | United Kingdom | en_US |
dc.identifier.scopusauthorid | Zhou, W=10739745800 | en_US |
dc.identifier.citeulike | 2674884 | - |
dc.identifier.issnl | 0022-1821 | - |