## A Search-Based Theory of Mergers and Acquisitions

_IMF Working Papers, November 14, 2025_

## Source details

**Canonical URL:** [A Search-Based Theory of Mergers and Acquisitions](https://www.imf.org/en/publications/wp/issues/2025/11/14/a-search-based-theory-of-mergers-and-acquisitions-571856)

## Other formats

- [Markdown version](/en/publications/wp/issues/2025/11/14/a-search-based-theory-of-mergers-and-acquisitions-571856/index.md)
- [Structured JSON version](/en/publications/wp/issues/2025/11/14/a-search-based-theory-of-mergers-and-acquisitions-571856/index.json)
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## Bibliographic details
- Authors: Flavien Moreau, Semih Üslü
- Published: November 14, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229030601.001

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### Core model and objectives
- Develops a search-based theory of mergers and acquisitions with heterogeneous firms and endogenous search complementarities.
- Uses the model to analyze how merger incentives and the firm size distribution interact.
- Key model elements: search costs, entry rates, endogenous search complementarities, heterogeneous firms, bargaining.

### Equilibrium, dynamics, and analytical results
- In equilibrium, search costs and entry rates determine search intensities and shape the distribution of market power.
- Derives the law of motion of the firm size distribution.
- Provides closed-form solutions for aspects of the model.
- Solves for endogenous search efforts.

### Welfare, simulations, and policy analysis
- Derives the aggregate welfare function within the model framework.
- Uses the framework to simulate the impact of various antitrust policies.
- Key finding: antitrust policy can have large effects on welfare due to the existence of multiple equilibria.

### Subject areas and keywords
- Subject: Econometric analysis, International trade, Labor, Plurilateral trade, Search models, Trade balance, Trade surpluses, Wages
- Keywords: Bargaining, distribution interact, endogenous search complementarity, IMF working papers, Market power, merger incentive, Mergers & acquisitions, Plurilateral trade, Search, search intensity, Search models, theory of merger, Trade balance, Trade surpluses, Wages

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2025/11/14/a-search-based-theory-of-mergers-and-acquisitions-571856_