Economics, Econometrics and Finance
4 years ago

Mergers Become Profitable for All Firms, Boosting Market Efficiency

The Merger-Paradox: A Tournament-Based Solution
Cuihong Fan, Elmar Wolfstetter

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The article solves the merger paradox in business by suggesting a new way for companies to merge that is always profitable and often increases overall welfare. The key idea is to have merged firms operate as separate parts and reward them based on how well they perform compared to each other.