Working paper
Strategic Merger Approvals Under Incomplete Information
2022
DOI:
https://doi.org/10.7273/000004767
Abstract
We examine a signaling game where the merging entity privately observes the cost-reduction e¤ect from the merger, but the competition authority does not. The latter, however, observes the …rm's submission costs in the merger request, using them to infer its type. We identify pooling equilibria where all …rm types, even those with small e¢ ciencies, submit a merger request, which is approved by the regulator. This merger pro…le cannot be supported under complete information, thus leading to ine¢ ciencies. We investigate under which parameter conditions ine¢ cient mergers are less likely to arise in equilibrium, and which policies hinder them, ultimately improving information transmission from …rms to the competition authority.
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Details
- Title
- Strategic Merger Approvals Under Incomplete Information
- Creators
- Felix Munoz-Garcia (Author) - Washington State University, Economic Sciences, School ofKiriti Kanjilal (Author) - Indraprastha Institute of Information Technology Delhi
- Academic Unit
- Economic Sciences, School of
- Identifiers
- 99900972240601842
- Language
- English
- Resource Type
- Working paper