Abstract
Merger policy is a permission-granting activity by government in which there may be disincentives to seek permission because of the benefit from having other firms merge. We set up a sequential merger game with endogenized antitrust policy to study these disincentives. In particular, we delineate a pill-sweetening motive for waiting to merge: a firm may choose to let other firms move first, in order to get more mergers approved. We report the prevalence of this and other motives for not merging at once and find it to hinge on efficiency gains from a merger, differently-sized firms, firms' production technology, the presence of an antitrust authority, and the alignment of interests between antitrust authorities and firms.
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