Mergers and the market for organization capital

In this paper, mergers are an equilibrium outcome in which acquirers “marry” targets so as to gain access to their organization capital. Firms that are good at learning about a new technology are not necessarily those that can manage it well. If the organization capital is tradable, there should exist a market for it as there are gains from trade. The model generates a merger wave after deregulation or a shock to technology. I compare the implied wave to the actual merger wave in the telecom sector, which was deregulated just before the merger wave took place.