Post-merger internal organization in multitier decentralized supply chains

Margarida Catalão-Lopes, Duarte Brito

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This paper analyses the effects upon firms and consumers of horizontal mergers in a multitier decentralized supply chain with a finite number of players in each tier, when firms may opt for two different post-merger internal organization forms: multidivisional, in which separate divisions are kept, or traditional, with cost synergies. To this effect, we develop and solve a formal gametheory-based Cournot model. The main results are: independently of the tier in which the merger takes place, higher synergies do not always lead to higher consumer welfare; despite the fact that the proposal of a traditional merger reveals significant cost savings consumer welfare may still decrease with the merger; traditional downstream mergers tend to be more profitable than traditional upstream ones; multidivisional mergers are always profitable.

Original languageEnglish
Pages (from-to)251-289
JournalJournal of Economics/ Zeitschrift fur Nationalokonomie
Volume132
Issue number3
DOIs
Publication statusPublished - Apr 2021

Keywords

  • Cost savings
  • Mergers
  • Multidivisional firms
  • Supply chain

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