Author : Jessica Calfee Stahl
Publisher :
ISBN 13 :
Total Pages : 170 pages
Book Rating : 4.:/5 (69 download)
Book Synopsis Essays on Market Structure and Firm Strategies by : Jessica Calfee Stahl
Download or read book Essays on Market Structure and Firm Strategies written by Jessica Calfee Stahl and published by . This book was released on 2009 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: While mergers are highly visible and changes in market structure can have large effects on social welfare, very little empirical work has studied the determinants of merger activity. My dissertation analyzes merger decisions made by firms so as to understand incentives to merge. Chapter 1 uses patent citation data to determine whether firms are more or less actively engaged in sequential innovation after they merge. The ability to capture information spillovers may enhance merged firms' incentives to build upon one another's innovations; yet merging may reduce the firms' incentives to leap-frog one another. Looking at mergers between public companies from 1980 to 2003, I find that in nearly all industries, cross-citations between two firms increase before they merge and then fall after they merge. This suggests that the firms were engaged in an innovation race that was slowed by the merger. Firms may seek out these mergers partly to reduce innovation competition. Chapter 2 exploits an exogenous change in regulation that led to significant consolidation in the broadcast television industry. The vast majority of consolidation was across local markets, so it is not clear what drove consolidation. This chapter uses a panel dataset on ownership and revenue of broadcast stations in order to estimate the revenue advantages of consolidation. I find that revenue advantages come through access to a wider audience, most likely because a firm can offer advertisers more viewers per contract. Chapter 3 uses results from the second chapter, and estimates a dynamic oligopoly model in order to identify the cost advantages of consolidation in the television industry. I infer costs from patterns in ownership changes that are unexplained by revenue estimation. I model firms' decisions as a dynamic game, and estimate the game using a two-step method recently developed by Bajari, Benkard and Levin (2007). This is the first paper to estimate a model of merger activity in a dynamic, strategic framework. I find that owning more stations enables firms to reduce per-station operating costs. A firm's ability to do this is affected by its stations' network affiliations, the location of its stations and the demographic heterogeneity of its viewers.