Working Paper Series
Getting a Better Price: Strategic Behaviour before Changes in Ownership of Corporate Assets
(), Pehr-Johan Norbäck
() and Lars Persson
Abstract: We propose a model of investments prior to corporate
ownership changes. We derive conditions under which the selling of a firm
triggers overinvestment by both the seller and the buyer prior to the asset
transfer. In a setting with Cournot competition, we show that these
incentives can drive the consumer prices in a post-acquisition duopoly
below those of an ongoing triopoly. Our analysis warns against a mechanical
use of pre-merger benchmarks in ex post merger evaluations.
Keywords: Mergers & Acquisitions; Ownership; Auctions; Strategic Investments; Merger Evaluations; (follow links to similar papers)
JEL-Codes: L13; L40; L66; (follow links to similar papers)
34 pages, November 13, 2008
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom