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HORIZONTAL MERGERS WITH CAPITAL ADJUSTMENT: WORKERS' COOPERATIVES AND THE MERGER PARADOX

HORIZONTAL MERGERS WITH CAPITAL ADJUSTMENT: WORKERS' COOPERATIVES AND THE MERGER PARADOX We study the incentives towards horizontal merger among firms when the amount of capital is the strategic variable. We focus on workers' cooperatives, but our conclusions apply also to employment‐constrained profit maximizers. Within a simple oligopoly model, we prove that the horizontal merger, for any merger size, is: (i) privately efficient for insiders as well as for outsiders; (ii) socially efficient if market size is large enough, even in the case of merger to monopoly. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Annals of Public and Cooperative Economics Wiley

HORIZONTAL MERGERS WITH CAPITAL ADJUSTMENT: WORKERS' COOPERATIVES AND THE MERGER PARADOX

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References (15)

Publisher
Wiley
Copyright
Journal compilation © 2016 CIRIEC
ISSN
1370-4788
eISSN
1467-8292
DOI
10.1111/apce.12125
Publisher site
See Article on Publisher Site

Abstract

We study the incentives towards horizontal merger among firms when the amount of capital is the strategic variable. We focus on workers' cooperatives, but our conclusions apply also to employment‐constrained profit maximizers. Within a simple oligopoly model, we prove that the horizontal merger, for any merger size, is: (i) privately efficient for insiders as well as for outsiders; (ii) socially efficient if market size is large enough, even in the case of merger to monopoly.

Journal

Annals of Public and Cooperative EconomicsWiley

Published: Dec 1, 2016

Keywords: ; ; ; ; ; ;

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