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Conglomerate Mergers and Optimal Investment Policy

Published online by Cambridge University Press:  19 October 2009

David L. Shapiro
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Extract

A question that bedevils the academic economist, the trustbuster, and the community at large is whether conglomerate merger activity is a force for good or evil. In common with horizontal and vertical merger activity, the critical consideration is whether conglomerate mergers produce better uses of resources, increases in monopoly power, or some mixture of these two results. Economists have been examining these mergers in an effort to determine whether efficiency in the use of resources is, in fact, promoted. However, when investigating this question, the subject of inquiry is usually confined to the optimizing decision of the firm. It has been argued that conglomerate activity involves the best use of resources from the standpoint of the firm.

Type
Financial Management
Information
Journal of Financial and Quantitative Analysis , Volume 4 , Issue 5 , January 1970 , pp. 643 - 656
Copyright
Copyright © School of Business Administration, University of Washington 1970

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References

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