Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-52194
Borek, Thomas; Buehler, Stefan; Schmutzler, Armin (2004). Mergers under Asymmetric Information Is there a Lemons Problem? Working paper series / Socioeconomic Institute No. 408, University of Zurich.
We analyze a Bayesian merger game under two-sided asymmetric information about firm types. We show that the standard prediction of the lemons market model–if any, only low-type firms are traded–is likely to be misleading: Merger returns, i.e. the difference between pre- and post-merger profits, are not necessarily higher for low-type firms. This has two implications. First, under very general conditions, equilibria exist where mergers take place, and there is no presumption that there is ineffciently low trade. Second, in these equilibria it is typically not the case that only low-type firms enter an agreement.
387 downloads since deposited on 29 Nov 2011
99 downloads since 12 months
|Item Type:||Working Paper|
|Communities & Collections:||03 Faculty of Economics > Department of Economics
Working Paper Series > Socioeconomic Institute (former)
|Dewey Decimal Classification:||330 Economics|
|JEL Classification:||D43, D82, L13, L33|
|Deposited On:||29 Nov 2011 22:32|
|Last Modified:||09 Jul 2012 05:03|
|Series Name:||Working paper series / Socioeconomic Institute|
Users (please log in): suggest update or correction for this item
Repository Staff Only: item control page