SMALL FIRMS AND THE MERGER MANIA - REPLY

Research on performance differences between small and large firms is booming. It emerges relatively separated from the mainstream Industrial Organization Literature. Inspired by Levy's comment on an earlier paper we try to bridge the gap between the two areas. Especially we screen non cooperative game theoretical models for predictions on performance differences. Most of them forecast higher profits for larger firms, but there exist also some models which predict the opposite for very specific circumstances.