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Profitable Horizontal Mergers Without Cost Advantages
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Book Synopsis Profitable Horizontal Mergers Without Cost Advantages by : Steffen Huck
Download or read book Profitable Horizontal Mergers Without Cost Advantages written by Steffen Huck and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Merged firms are typically rather complex organizations. Accordingly, merger has a more profound effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare-improving even if costs are linear. The driving force behind these results, which help to reconcile theory with various empirical findings, is the assumption that information about output decisions flows more freely within a merged firm. This induces a commitment advantage for the merged firm.
Book Synopsis Mergers and (uncertain) Synergies in Oligopoly by : Kathrin Tiecke
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 with total page 93 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 e
Book Synopsis Horizontal Mergers by : Berardino Cesi
Download or read book Horizontal Mergers written by Berardino Cesi and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that in a three-firm infinitely repeated Cournot game, there exists a"stick and carrot"strategy equilibrium in which an exogenous bilateral horizontal merger is profitable and the incentive to remain out of the merger disappears. In this sub-game perfect equilibrium, the merged entity produces the duopoly quantity and the outsider limits its production to half the duopoly quantity. Our stick and carrot strategy entails that the merged entity threatens to produce twice the triopoly quantity for two periods if the outsider does not produce half the duopoly quantity. In this equilibrium, the aggregate price remains high enough to make the merger profitable for the insiders. Also, the quantity produced by the outsider is sufficiently low to eliminate the difference between the profit of the outsider and the merging firm.
Book Synopsis Horizontal Mergers with Synergies by : Wei Ding
Download or read book Horizontal Mergers with Synergies written by Wei Ding and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider takeover bidding in a Cournot oligopoly when firms have private information concerning the synergy effect of merging with a takeover target and bidders can influence rivals' beliefs through their bids. We compare cash and profit-share auctions, first- and second-price, supplemented by entry fees. Since non-merged firms benefit from a merger if synergies are low, bidders are subject to a positive externality with positive probability; nevertheless, pooling does not occur. Unlike cash auctions, profit-share auctions are not revenue equivalent, and the second-price profit-share auction is more profitable than the other auctions.
Book Synopsis Comment on 'Mergers in Patent Contest Models with Synergies and Spillovers' by : Bernd Schauenberg
Download or read book Comment on 'Mergers in Patent Contest Models with Synergies and Spillovers' written by Bernd Schauenberg and published by . This book was released on 2006 with total page 4 pages. Available in PDF, EPUB and Kindle. Book excerpt: Peter-J. Jost and Claus van der Velden, the authors, discuss a very interesting problem. They ask whether horizontal mergers may be profitable. Their starting point is a well-known result from Salant, Switzer, and Reynolds (1983). They show in a conventional Cournot oligopoly framework that a horizontal merger can hardly be profitable for the merging firms. The merging firms, the insiders, realize some cost advantage after the merger and therefore reduce their output. The non-participating firms, the outsiders, realize that aggregate demand does not change due to the merger and expand their output, given the aggregate output of the insiders. Thus, the sum of the profits of the insiders decreases. When the profit reduction due to the output decision of the outsiders is greater than the cost efficiencies that motivated the merger, then the sum of the insiders' profits may be smaller after the merger.The authors examine a research-intensive industry. There are n firms engaged in a patent race. Winning the race results in a large first-mover advantage that may endure for some years. The incentives to innovate are without any reasonable doubt very high. But on the other side, the firms may have an incentive to economize on costs. Depending on either the industry effects or the state of scientific progress, Ramp;D expenditures may be very high for a single firm. These expenditures can be the motive for some of the involved firms to consider a merger. Thus, the authors discuss the trade-off between an incentive to innovate and an incentive to economize on costs.
Book Synopsis Horizontal Mergers by : Joseph V. Farrell
Download or read book Horizontal Mergers written by Joseph V. Farrell and published by . This book was released on 1988 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Economic Assessment of Mergers Under European Competition Law by : Daniel Gore
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.
Book Synopsis U.S. Department of Justice Merger Guidelines by : United States. Department of Justice. Antitrust Division
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 1982 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Price and Profit Effects of Horizontal Mergers by : United States. Federal Trade Commission. Bureau of Economics
Download or read book The Price and Profit Effects of Horizontal Mergers written by United States. Federal Trade Commission. Bureau of Economics and published by . This book was released on 1983 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Impact of Horizontal Mergers and Acquisitions in Price Competition Models by : Awi Federgruen
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.
Book Synopsis Mergers and Acquisitions. Types and Motivations for a Deal by : Kristina Kraft
Download or read book Mergers and Acquisitions. Types and Motivations for a Deal written by Kristina Kraft and published by GRIN Verlag. This book was released on 2016-05-24 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2016 in the subject Business economics - Operations Research, Heilbronn University of Applied Sciences, language: English, abstract: Mergers and acquisitions have been taking place since decades and will continue. There are a lot of facts about benefits, about the risks or new methods to be profitable in a merger or an acquisition. A lot of literature shows us that more than about 60% of the mergers and acquisitions are a failure. Besides, the high failure rates this paper illustrates deal motivations for mergers and acquisitions. This paper was written by an author whose mother tongue is not English. Please excuse any mistakes or inconsistencies.
Book Synopsis Horizontal Mergers of Price-Setting Firms with Sunk Capacity Costs by : Kyung Hwan Baik
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.
Book Synopsis Costs and Benefits of Horizontal Mergers in a Global Perspective by :
Download or read book Costs and Benefits of Horizontal Mergers in a Global Perspective written by and published by . This book was released on 1993 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Price and Profit Effects of Horizontal Mergers by : David M. Barton
Download or read book The Price and Profit Effects of Horizontal Mergers written by David M. Barton and published by . This book was released on 1983 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Horizontal Mergers with Free-Entry by : Luis M. B. Cabral
Download or read book Horizontal Mergers with Free-Entry written by Luis M. B. Cabral and published by . This book was released on 2008 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: I analyze the effects of a merger between two firms in a spatially differentiatedoligopoly. I make the crucial assumption that the industry is at a free-entry equilibriumboth before and after the merger. In particular, I allow for the possibility of entry subsequent to the merger. Not surprisingly, this possibility improves the effect of the merger on consumer welfare. More importantly, I show that post-merger entry dramatically shifts the perspective on cost efficiencies as a merger defense and asset sales as a remedy. Cost efficiencies (in the form of lower marginal cost) decreasethe likelihood of entry, and thus benefit consumers less than if entry conditions wereexogenously given. Likewise, by selling assets (stores) to potential rivals, merging firms effectively buy them oreg;,quot; that is, dissuade them from opening new stores, an effect that is detrimental to consumers.
Book Synopsis Horizontal Mergers and Delegation by : Steffen Ziss
Download or read book Horizontal Mergers and Delegation written by Steffen Ziss and published by . This book was released on 1999 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :Dennis C. Mueller Publisher :Cambridge, Mass. : Oelgeschlager, Gunn & Hain ; Königstein/Ts. : Verlag A. Hain ISBN 13 : Total Pages :402 pages Book Rating :4.3/5 (97 download)
Book Synopsis The Determinants and Effects of Mergers by : Dennis C. Mueller
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 402 pages. Available in PDF, EPUB and Kindle. Book excerpt:
