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Mergers and synergism—some chance‐constraint perspectives
Author(s) -
Bulmash Samuel,
Mehrez Abraham
Publication year - 1986
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090070111
Subject(s) - constraint (computer aided design) , economics , profit (economics) , microeconomics , reflection (computer programming) , mathematical economics , industrial organization , econometrics , computer science , mathematics , geometry , programming language
This paper presents a single‐period model in which profit‐maximizing firms, subjected to externally imposed risk‐constraints, can generate synergistic benefits through merger. It is shown that those effects depend upon several conditions and assumptions, whose reflection of the real world can vary from one case to another. The model provides some important theoretical insights to understanding the conflicting empirical results of several recent studies concerning synergistic benefits.