Business acquisition, resource redeployment, and asset divestiture are elements of a dynamic process in which firms change their businesses by recombining internal and external resources. Analyzing 253 horizontal acquisitions, we show that post-acquisition resource redeployment leads to asset divestiture from the business that receives the redeployed resources, but not from the business that co...

This paper demonstrates that vertical divestiture may increase consumer welfare even when the divestiture eliminates substantial scope economies and precludes only limited sabotage. More generally, the merits of vertical divestiture are shown to vary with: (1) the type and the intensity of competition in the retail market; (2) the locus of scope economies under vertical integration; and (3) the...

The paper presents an empirical model of the “make or buy” decision faced by independent power producers (IPPs) in restructured U.S. wholesale electricity markets. The model is applied to plant-level data that track the investment decisions of major IPPs from 1996 to 2000, yielding estimates of each firm’s investment cost and expected profit functions. The estimates are used to evaluate the eff...

when shareholders have agreement about divestiture of company’s share in stock exchange, they decide to change and improve their business ownership structure and the presence of a large shareholder to help divestiture. the present study was aimed to investigate the effect of presence of large shareholder to tends firm to divestiture by a new approach. for this purpose, the propensity score a sa...

In telecommunications industries access charge problems are important issues during deregulation. In Japan and the US, deregulation also involves the issue of industrial structures as integration or divestiture of a long-distance sector. This paper analyzes access charge problems by introducing effects of the divestiture on cost functions. We show how the effects influence economic welfare unde...

The reform of state-owned enterprises (SOEs) has become an integral part of most macroeconomic stabilisation programmes implemented worldwide in recent years. The main instruments used to reform these enterprises have been divestiture and workforce downsizing. In Latin America, in particular, the pursuit of fiscal consolidation has added another important dimension to public enterprise reform. ...

We provide an alternative theory of divestiture that relies on product-line complementarities and product market competition. We show that in equilibrium competing conglomerates with complementary product lines have incentives to divest and that such divestitures increase both the prices of all the products and the profits of the parent firms, but reduce total surplus. We further show that if t...

The paper concentrates on four aspects of mitigating market power in European electricity networks: capacity divestiture, entry, promoting interconnection, and the capacity to regulate competition in generation, drawing on lessons from Britain, California and the Continent. Each of these actions can improve the intensity of competition in electricity wholesale markets, but attractive strategies...

Despite being a widely used tool in merger enforcement, there have been few studies of whether antitrust divestitures are successful. We help fill this void by conducting a study of the divestitures relating to Johnson & Johnson’s $16.6 billion acquisition of Pfizer’s consumer health division in 2006. Six brands were divested in this matter to alleviate antitrust concern. For three of the brand...