Endogenous mergers in concentrated markets

Horn, Henrik; Persson, Lars

doi:10.1016/s0167-7187(99)00062-4

Cited by 124 publications

(118 citation statements)

References 19 publications

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“…The solution procedure in the present paper is based on the endogenous merger formation model developed by Horn and Persson (2001a). 20 Based upon the earlier literature on mergers, and on actual observations of …rms'behavior, they take the view that merger formation can be treated as a cooperative game since parties involved in the formation process are free to communicate and sign binding contracts.…”

Section: Endogenous Merger Formationmentioning

confidence: 99%

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On the Relationship between Tariff Levels and the Nature of Mergers

Yildiz¹,

Ulus²

2012

The B.E. Journal of Economic Analysis &Amp; Policy

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This paper employs an endogenous merger formation approach in a two-country oligopoly model of trade to examine the international linkages between the nature of mergers and tari¤ levels. Firms sell di¤erentiated products and compete in a Bertrand fashion in product markets. We …nd two e¤ects playing key roles in determining equilibrium market structure: the tari¤ saving e¤ ect and the protection gain e¤ ect. The balance between these two e¤ects implies that, when foreign country practices free trade, unilateral tari¤ reduction by a domestic country yields international mergers irrespective of the substitutability levels. By contrast, when foreign tari¤s are su¢ ciently high and products are close substitutes, national mergers obtain in the equilibrium. Therefore, the implications of unilateral trade liberalization on the equilibrium market structure depends on the trade regime in foreign country especially when products are close substitutes. Unlike this asymmetric result of unilateral trade liberalization, we …nd that when bilateral tari¤s are su¢ ciently low, international mergers arise. These results …t well with the fact that global trade liberalization has been accompanied by an increase in international merger activities. Finally, from a welfare perspective, we show that international mergers are preferable to national mergers and thus social and private merger incentives become aligned together as trade gets bilaterally liberalized.

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Section: Endogenous Merger Formationmentioning

confidence: 99%

“…In determining market structure, we utilize a cooperative approach of endogenous merger formation developed by Horn and Persson (2001a). However, unlike Horn and Persson (2001b), we utilize price competition as in Deneckere and Davidson (1985).…”

mentioning

confidence: 99%

On the Relationship between Tariff Levels and the Nature of Mergers

Yildiz¹,

Ulus²

2012

The B.E. Journal of Economic Analysis &Amp; Policy

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“…In such cases only international mergers are feasible and this will also be the merger equilibrium, provided that cross-border mergers are privately profitable. implies that most of the losses in consumer surplus occur in third countries, which again 16 In general, only the sum of profits among the decisive owners matters for the equilibrium merger structure (Horn and Persson, 2001b). In our model, however, the owners of all firms are decisive.…”

Section: Endogenous Merger Equilibriamentioning

confidence: 99%

Merger policy to promote 'global players'? A simple model

Haufler¹,

Nielsen

2007

Oxford Economic Papers

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We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyze under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies enacted by a national merger authority tend to be overly restrictive from a global efficiency perspective. In contrast, all international mergers that benefit the merging firms will be cleared by either a national or a regional regulator, and this laissez-faire approach is also globally efficient. Finally, we derive the properties of the endogenous merger equilibrium.

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“…First, this assumption describes the current practice in the major antitrust jurisdictions. 7 Second, this assumption allows us to keep the analysis extremely simple.…”

Section: Introductionmentioning

confidence: 99%

EFFICIENCY GAINS AND STRUCTURAL REMEDIES IN MERGER CONTROL^*

Vasconcelos

2010

The J Industrial Economics

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This paper studies the role of structural remedies in merger control in a Cournot setting where (endogenous) mergers are motivated by prospective efficiency gains. Every merger has to be submitted to an Antitrust Authority (AA) which, apart from blocking or unconditionally approving it, might approve a modified version of the concentration where divestitures are required. Some important merger policy implications can be drawn. First, when divestitures are required, the AA over-fixes, i.e., goes beyond the recreation of the level of competition that existed prior to the transaction. Second, by insisting in overfixing, the AA may discourage firms to look for more efficient mergers. Finally, structural remedies are shown to open up new merger opportunities to firms.

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Endogenous mergers in concentrated markets

Cited by 124 publications

References 19 publications

On the Relationship between Tariff Levels and the Nature of Mergers

On the Relationship between Tariff Levels and the Nature of Mergers

Merger policy to promote 'global players'? A simple model

EFFICIENCY GAINS AND STRUCTURAL REMEDIES IN MERGER CONTROL^*

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Endogenous mergers in concentrated markets

Cited by 124 publications

References 19 publications

On the Relationship between Tariff Levels and the Nature of Mergers

On the Relationship between Tariff Levels and the Nature of Mergers

Merger policy to promote 'global players'? A simple model

EFFICIENCY GAINS AND STRUCTURAL REMEDIES IN MERGER CONTROL*

Contact Info

Product

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About

EFFICIENCY GAINS AND STRUCTURAL REMEDIES IN MERGER CONTROL^*