We analyze horizontal mergers when the acquirer holds a passive partial ownership stake (PPO) in the target firm prior to the merger. We show that a PPO reduces the minimal synergy level necessary to make a merger beneficial for consumers. It follows that an antitrust authority ignoring existing...

By the time a young Ronald Coase was composing “The Nature of the Firm” (1937), litigation had already started wending its way through American courts that took up questions that really anticipated Grossman, Hart and Moore on control rights and Simon and Williamson on adaptation, vertical...