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| Publications [#338562] of Giuseppe Lopomo
Papers Submitted
- Brusco, S; Lopomo, G; Viswanathan, S, Merger Mechanisms
(2004)
(last updated on 2025/04/11)
Abstract:
A firm can merge with one of n potential partners. The owner of
each firm has private information about both his firm's stand-alone value and a component of the synergies that would be realized by the merger
involving his firm. We characterize incentive-efficient mechanisms in two
cases. First, we assume that the value of any newly formed partnership
is verifiable, hence transfers can be made contingent on the new information accruing after the merger. Second, we study the case of uncontingent
rules. In the first case, we show that it is not optimal, in general, to redistribute shares of non-merging firms,
and identify necessary and sufficient conditions for the implementability of efficient merger rules. In the second case, we show
that the first-best can be obtained i) always, if the synergy values are privately known but the firms' stand-alone values
are observable; ii) only with sufficiently large synergies, if the firms' stand-alone are privately known;
and iii) never, if the set of feasible mechanisms is restricted to "auctions in shares".
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