期刊名称：Discussion Papers / Department of Economics, University of Essex
出版年度：2007
卷号：2007
出版社：University of Essex
摘要：We assess the impact of merger policy on entry and entrepreneurship. Facing
uncertainty about its prospects and foreseeing that it may wish to quit should
profitability prove poor, a rational entrant considers possible exit routes.
Horizontal merger reduces competition subsequently, lowering welfare in the
short run, but also provides a valuable exit route. By facilitating exit and
thus raising the value of entry, more lenient merger policy may stimulate entry
sufficiently that welfare is increased overall. We calculate the optimal merger
policy in the form of a low, but positive, profitability threshold below which a
merger is permitted despite its adverse impact on post-merger competition. This
may be viewed as an extension of the "failing firm defence" to include ailing,
low profitability firms as well as imminently failing ones. The implications of
strategic firm behaviour for the optimal policy are examined, and merger policy
is compared with an entry subsidy.
