Due to the quick advancement of science and technology, the services sector which has a high content of knowledge and technology has experienced globally expeditious development in the past decade. Development in general and the growth of Knowledge Intensive Business Services (KIBS) such as...

The profitability of horizontal mergers is investigated in a situation in which firms face a production shock and therefore are uncertain about their future costs. I show that, due to production rationalization, small-scale mergers can be profitable if the uncertainty is large. The efficiency...