Download or read book The Impact of Horizontal Merger and Acquisitions in Price Competition Models written by Awi Federgruen and published by . This book was released on 2014 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The question of what impact mergers and acquisitions have on key equilibrium performance measures is fundamental to our understanding of competitive dynamics in an oligopolistic industry. We address these questions in the context of price competition models with differentiated goods and asymmetric firms allowing for general non-linear demand and cost functions merely assuming that both the pre- and post-merger competition games are super modular along with two minor technical conditions. We show that, in the absence of cost synergies, post-merger equilibrium prices exceed their pre-merger levels. Moreover, the post-merger equilibrium profit of the merged firms exceeds the aggregate of the pre-merger equilibrium profits of the merging firms. The equilibrium profit of the non-merging firms increases as well. We establish our results, at first, for settings where each firm in the industry offers a single product; we then generalize them to industries with multi-product firms. We also derive conditions under which cost synergies, by themselves, result in lower equilibrium prices than otherwise observed post-merger, and discuss how the combined effect of increased market concentration and cost synergies can be assessed efficiently.

Download or read book The Impact of Horizontal Mergers and Acquisitions in Price Competition Models written by Awi Federgruen and published by . This book was released on 2011 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: The question of what impact mergers and acquisitions have on key equilibrium performance measures is fundamental to our understanding of competitive dynamics in an oligopolistic industry. We address these questions in the context of price competition models with differentiated goods and asymmetric firms allowing for general non-linear demand and cost functions merely assuming that both the pre- and post-merger competition games are supermodular along with two minor technical conditions. We show that, in the absence of cost synergies, post-merger equilibrium prices exceed their pre-merger levels. Moreover, the post-merger equilibrium profit of the merged firms exceeds the aggregate of the premerger equilibrium profits of the merging firms. The equilibrium profit of the non-merging firms increases as well. We establish our results, at first, for settings where each firm in the industry offers a single product; we then generalize them to industries with multi-product firms. We also derive conditions under which cost synergies, by themselves, result in lower equilibrium prices than otherwise observe post-merger, and discuss how the combined effect of increased market concentration and cost synergies can be assessed efficiently.

Download or read book The Economic Assessment of Mergers Under European Competition Law written by Daniel Gore and published by Cambridge University Press. This book was released on 2013-04-25 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.

Download or read book Mergers and Acquisitions written by Duarte Brito and published by Kluwer Law International B.V.. This book was released on 2006-01-01 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: Drawing on twenty years of merger analysis literature, this single source offers practical solutions to a wide range of problems faced by specialists working in the field of mergers and acquisitions. The authors take an industrial organization approach in which effects on profits, on consumer surplus and on overall welfare are of greatest relevance. The focus is primarily on horizontal mergers, although vertical and conglomerate mergers are addressed when producers of complementary goods are involved. Among the issues and elements examined, the authors provide answers to the following: How does a merger affect the insider firm's profitabifity? Why may outsiders stock market value increase or decrease following a merger? What are the expected welfare effects of a merger? What sort of arguments can be used for merger defense? How do economists model the firm's merging decision? How can the authorities simulate the price effects of a horizontal merger? Is post-merger entry likely to compensate the effects of a merger? The discussion proceeds from an analysis of the simplest exercise of market power to evermore complex merger environments. In their detailed coverage of policy evaluation of proposed acquisitions, the authors provide a merger simulation toolkit which can be applied to important recent judicial decisions in the field. This book will be of great value not only to academics in microeconomics and industrial organization, but also to lawyers and officials seeking expert practical guidance in the business or administrative responsibilities surrounding mergers and acquisitions.

Download or read book Modelling European Mergers written by Peter A. G. van Bergeijk and published by Edward Elgar Publishing. This book was released on 2005-01-01 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt: Modelling European Mergers presents a comprehensive and fresh perspective on the economic analysis of mergers by leading academics and competition policymakers from Europe and the US. The book frankly discusses the pro's and con's of using applied game theory models in merger control from a historical and theoretical perspective. Seven case studies on the actual use of advanced techniques and models in legal procedures provide a perspective from the national competition authorities in Belgium, Denmark, Italy. The Netherlands and Sweden on markets that range from basic goods such as bread and aperitifs to complex products such as electricity, literature and software. The case studies provide many insights into practical issues such as data collection, procedures and errors of predication, as well as in the relative merits of different econometric approaches. A recurring theme of the book is how economic insights insights can be translated into convincing legal decisions.

Download or read book Horizontal Mergers written by George A. Hay and published by . This book was released on 1993 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Mergers and uncertain Synergies in Oligopoly written by Kathrin Tiecke and published by GRIN Verlag. This book was released on 2011-05-31 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Diploma Thesis from the year 2011 in the subject Economics - Micro-economics, grade: 2,0, Humboldt-University of Berlin (Wirtschaftstheorie II), course: VWL - Mikroökonomie, Industrial Organization, language: English, abstract: ...Farell and Shapiro state that there is no necessity for mergers as cooperation and coordination can be achieved at an equivalent level via contracts: “..., modern economic theory observes that virtually anything that can be done with a merger can in principle be done instead with some kind of contract, perhaps a very complex (or restrictive) one.” (Farrell and Shapiro 2001, p. 691)... 6.2 Concluding Remarks ...In the last section I introduce the strand of economic literature that deals with the process of mergers under uncertain efficiency gains. By introducing uncertain synergies to Cournot merger models the merger paradox can be solved in all above presented approaches and compared to the deterministic models there is a wider scope of profitable mergers. The informational asymmetry after the merger benefits the merger members although efficiency gains may be not obtained post merger. Thus mergers are more likely to be beneficial compared to the case where uncertain efficiency gains are not assumed. It has been shown that the incentives to merger coincide with the degree of uncertainty and when firms are aware of this uncertainty they are able to prepare for the post-merger integration process much better since post-merger actions can be specified more accurately. Any merger with uncertain synergies that needs to be approved by competition agencies can positively affect the approval by evaluating the uncertain efficiency gains with the required post-merger process... ...this may be an attempt to replicate the merger failures in the real world. To analyze further the role of uncertain synergies, models that depart from the one-shut nature should be implemented. This might give insights why merger formations appear wavelike and if the equilibrium changes when non-merged firms adjust as soon as they observe the true type of their (new) rival. As the world has become realistically more transparent the unmerged firms may observe rather fast whether they face a more or less efficient rival and so the time horizon should ex ante alter the expected profits of the market players compared to the one-shot nature of the standard Cournot game. The question what types of firms, the most or the least efficient ones are involved in a merger remains unanswered as there are ambiguous results in the theory of endogenous merger formation. The empirical observations also do not support the theory that low-performing firms are the preferred target for acquisitions.

Download or read book Horizontal Mergers of Price Setting Firms with Sunk Capacity Costs written by Kyung Hwan Baik and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the profitability of a horizontal merger and its effects on the outsiders' profits and industry prices in a market for a homogeneous product where firms with sunk capacity costs engage in price competition. We show that, unlike previous studies, a merger can hurt the outsiders, the postmerger prices can be lower than the premerger prices, and a merger can reduce the joint profits of the participating firms even in a static model of price competition.

Download or read book How the Chicago School Overshot the Mark written by Robert Pitofsky and published by Oxford University Press. This book was released on 2008-10-14 with total page 324 pages. Available in PDF, EPUB and Kindle. Book excerpt: How the Chicago School Overshot the Mark is about the rise and recent fall of American antitrust. It is a collection of 15 essays, almost all expressing a deep concern that conservative economic analysis is leading judges and enforcement officials toward an approach that will ultimately harm consumer welfare. For the past 40 years or so, U.S. antitrust has been dominated intellectually by an unusually conservative style of economic analysis. Its advocates, often referred to as "The Chicago School," argue that the free market (better than any unelected band of regulators) can do a better job of achieving efficiency and encouraging innovation than intrusive regulation. The cutting edge of Chicago School doctrine originated in academia and was popularized in books by brilliant and innovative law professors like Robert Bork and Richard Posner. Oddly, a response to that kind of conservative doctrine may be put together through collections of scores of articles but until now cannot be found in any one book. This collection of essays is designed in part to remedy that situation. The chapters in this book were written by academics, former law enforcers, private sector defense lawyers, Republicans and Democrats, representatives of the left, right and center. Virtually all agree that antitrust enforcement today is better as a result of conservative analysis, but virtually all also agree that there have been examples of extreme interpretations and misinterpretations of conservative economic theory that have led American antitrust in the wrong direction. The problem is not with conservative economic analysis but with those portions of that analysis that have "overshot the mark" producing an enforcement approach that is exceptionally generous to the private sector. If the scores of practices that traditionally have been regarded as anticompetitive are ignored, or not subjected to vigorous enforcement, prices will be higher, quality of products lower, and innovation diminished. In the end consumers will pay.

Download or read book Merger in the Round written by David T. Levy and published by . This book was released on 1989 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Handbook of Antitrust Economics written by Paolo Buccirossi and published by . This book was released on 2008-03-21 with total page 716 pages. Available in PDF, EPUB and Kindle. Book excerpt: Experts examine the application of economic theory to antitrust issues in both the United States and Europe, discussing mergers, agreements, abuses of dominance, and the impact of market features. Over the past twenty years, economic theory has begun to play a central role in antitrust matters. In earlier days, the application of antitrust rules was viewed almost entirely in formal terms; now it is widely accepted that the proper interpretation of these rules requires an understanding of how markets work and how firms can alter their efficient functioning. The Handbook of Antitrust Economics offers scholars, students, administrators, courts, companies, and lawyers the economist's view of the subject, describing the application of newly developed theoretical models and improved empirical methods to antitrust and competition law in both the United States and the European Union. (The book uses the U.S. term “antitrust law” and the European “competition law” interchangeably, emphasizing the commonalities between the two jurisdictions.) After a general discussion of the use of empirical methods in antitrust cases, the Handbook covers mergers, agreements, abuses of dominance (or unilateral conducts), and market features that affect the way firms compete. Chapters examine such topics as analyzing the competitive effects of both horizontal and vertical mergers, detecting and preventing cartels, theoretical and empirical analysis of vertical restraints, state aids, the relationship of competition law to the defense of intellectual property, and the application of antitrust law to “bidding markets,” network industries, and two-sided markets. Contributors Mark Armstrong, Jonathan B. Baker, Timothy F. Bresnahan, Paulo Buccirossi, Nicholas Economides, Hans W. Friederiszick, Luke M. Froeb, Richard J. Gilbert, Joseph E. Harrington, Jr., Paul Klemperer, Kai-Uwe Kuhn, Francine Lafontaine, Damien J. Neven, Patrick Rey, Michael H. Riordan, Jean-Charles Rochet, Lars-Hendrick Röller, Margaret Slade, Giancarlo Spagnolo, Jean Tirole, Thibaud Vergé, Vincent Verouden, John Vickers, Gregory J. Werden

Download or read book The Entry Inducing Effects of Horizontal Mergers written by Gregory Werden and published by . This book was released on 1996 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Horizontal Mergers and Product Quality written by Kurt Richard Brekke and published by . This book was released on 2014 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a spatial competition framework with three ex ante identical firms, we study the effects of a horizontal merger on quality, price and welfare. The merging firms always reduce quality. They also increase prices if demand responsiveness to quality is sufficiently low. The non-merging firm, on the other hand, always responds by increasing both quality and prices. Overall, a merger leads to higher average prices and quality in the market. The welfare implications of a merger are not clear-cut. If the demand responsiveness to quality is sufficiently high, some consumers benefit from the merger and social welfare might also increase.

Download or read book U S Department of Justice Merger Guidelines written by United States. Department of Justice. Antitrust Division and published by . This book was released on 1984 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Competitive Effects of Mergers Between Asymmetric Firms written by Federal Trade Federal Trade Commission and published by CreateSpace. This book was released on 2015-06-01 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 1992 Horizontal Merger Guidelines suggest that the merger of two relatively weak competitors may result in a strong competitor and may lead to lower prices, despite the resulting increase in concentration. This paper introduces incomplete information into a simple model of repeated competition among firms that are asymmetric in their likely degree of efficiency at each stage of competition. In such a setting there do exist profitable yet price-reducing mergers among weaker firms. This model reasonably describes mergers between asymmetric firms that participate in auction or procurement settings and strengthens insights from the literature on asymmetric auctions regarding postmerger incentives for aggressive pricing. Finally, this model illustrates that the efficiencies described in the typical modeling of mergers in the asymmetric auction literature have private but not social benefits, and thus should not be permitted as a justification for merger.

Download or read book The Determinants and Effects of Mergers written by Dennis C. Mueller and published by Cambridge, Mass. : Oelgeschlager, Gunn & Hain ; Königstein/Ts. : Verlag A. Hain. This book was released on 1980 with total page 392 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Non price Effects of Mergers and Acquisitions written by Justus Haucap and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we summarize the economic literature on non-price effects of mergers and acquisitions (M&As). Specifically, we discuss the effects of M&As on innovation, product variety, and sustainability. Although the relationship is theoretically ambiguous, the vast majority of ex-post evaluations of horizontal M&As finds large negative effects on innovation inputs and outputs. Results are mixed for outcomes related to variety and product quality. Literature on merger effects on sustainability is still scarce and not conclusive so far. Overall, the existing literature indicates that non-price effects of horizontal mergers seem to amplify negative consequences for consumers from price increases through reduced competition. We derive a number of ideas and options for merger policy.