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Abstract: The purpose of this paper is to study if the acquisitions of the SEAT and Skoda has lead to increased economic efficiency for Volkswagen AG due to economies of scale. This is achieved by estimation of the VAG cost function, using a translog specification. The results indicate that the merger with SEAT did increase the economies of scale available as production volumes increased due to the merger. No such effects was, however, found for the aquisition of Skoda.

Keywords: Automobile production; economies of scale; technological change

JEL-codes: D21; D24; L25

21 pages, October 1, 2006

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Published as

Niklas Rudholm, (2007), 'Mergers and Economies of Scale: Volkswagen AG 1976 - 2000', ICFAI Journal of Mergers and Acquisitions, vol 4, no 3, pages 79-90

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