Merger Efficiency Evaluation of Two-Stage Production System Based on Non-Cooperative Game Theory
In terms of how to choose the candidate target companies and predicting the feasibility of M&As,data envelopment analysis is applied to predict the feasibility of M&As with a two-stage production system.The production system has two distinct characteristics:(1) a decision-making unit consists of two tandem components;(2) one component is in a dominant position,and the other is in a subordinate position.A hypothetical DMU is merged by two or more DMUs.To solve this kind of merger efficiency evaluation problem,a DEA approach is firstly applied to evaluate the DMU's efficiency of the overall system and both components simultaneously.Then based on the idea of non-cooperative game,a game DEA approach is provided to evaluate the hypothetical DMU's merger efficiency of the overall system and both components on the condition that the current output level and efficiency are constant,which is helpful to analyze how the merged hypothetical DMU to save cost from its components.Finally,the model is applied to the simulation analysis of Taiwan's 24 non-life insurance companies.Because the model can effectively analyze all internal sub-units' merger efficiencies of a hypothetical DMU with non-cooperative game concepts,the developed approach can imply more effective and veracious decision-making information for management.
DEAtwo-stage production systemmerger efficiencynon-cooperative game theory