Accessible Requires Authentication Published by De Gruyter September 11, 2019

Myopic Mergers across Borders with Incomplete Information in GOLE

Hamid Beladi, Avik Chakrabarti and Daniel Hollas

Abstract

In this paper, we present a tractable general equilibrium model capturing the incentives for myopic mergers in oligopolistic industries with incomplete information about rivals’ costs. We demonstrate that ex-ante gains from myopic mergers between firms with incomplete information about rival’s cost are larger when the difference between unknown components of their costs is wider. We also show that ex-ante gains from myopic mergers between firms across countries with large differences in factor endowments, ceteris paribus, would be greater than the ex-ante gains from mergers between countries with relatively similar factor endowments.

JEL Classification: F10; F12; L13

Acknowledgements

We are grateful to Editor Till Requate for insightful suggestons on an earlier version of this paper.

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Published Online: 2019-09-11

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