Merger Incentives and the Failing Firm Defense
研究了盈利企业与困境企业合并的激励，发现企业更偏好困境企业退出而非收购，但在产品差异化足够大时，困境企业抗辩可能提升福利。
The merger incentives between profitable firms differ fundamentally from the incentives of a profitable firm to merge with a failing firm. We investigate these incentives under different modes of price competition and Cournot behavior. Our main finding is that firms strictly prefer exit of the failing firm to acquisition. This result may imply that other than strategic reasons, like economies of scale, must be looked for to understand why firms make use of the failing firm defense. However, when products are sufficiently heterogenous, we find that (i) the failing firm defense can be welfare enhancing and (ii) a government bail‐out increases total welfare when the number of firms is sufficiently low.