Excerpt from Assessing Competition in the Market for Corporate November 1981

Since the managerial objective function is unknown, I develop the conditions for rivalry under stockholder wealth maximization in section and managerial welfare maximization in section When an objective of shareholder wealth maximization is assumed, rivalry is characterized in terms of the gain that accrues to potential bidding firms; the price of the target firm rises until the acquisition is a nonnegative net present value investment for only the successful bidder. Under managerial welfare maximization, the offer price rises until only the successful bidder's management realizes an increase in welfare from the acquisition.

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