We study optimal merger policy in a dynamic model in which the presence of scale economies implies that firms can … the period the merger is proposed. We also find that the abil- ity to commit can lead to a significant welfare improvement …

mergers. If this assumption held, a positive external effect of a proposed merger would represent a sufficient condition to … allow the merger. However, the empirical picture on mergers and acquisitions reveals a significant share of unprofitable … mergers and economic theory, moreover, demonstrates that privately unprofitable mergers can be the result of rational action …