Industry Concentration and Welfare: On the Use of Stock Market Evidence from Horizontal Mergers

Abstract

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The Impact of Merger Legislation on Bank Mergers

“…Duso et al (2007) and Duso et al (2013) who employ the same approach in an assessment of EU merger control policy. Note, however, that the classic interpretation of the sign of rivals' stock price reaction has recently also been questioned by Fridolfsson and Stennek (2010) on the ground that it does not take properly into account the market's anticipation that a merger would take place. 16 been defined as national in geographic size.…”

Equilibrium and strategies of horizontal mergers inasymmetric differentiated oligopoly

“…This is one of the reasons why this thesis will consider both the Cournot and Bertrand Oligopoly models for the same issue. Fridolfsson and Stennek (2010) present their endogenous mergers and demonstrate that competitors' share prices may be reduced by anti-competitive mergers when there is announcement or rumor that informs the market that the competitors fail to buy the target. They conclude that anti-competitive mergers can still reduce competitors' share prices when increasing their profits, which is very similar to the statement that not raising all prices does not invoke efficiencies (See Higgins, Johnson, and Sullivan (2005)).…”

“…Researches on the price and profit effects are definitely the fundamental and primitive (As Barton and Sherman (1984), Perry and Porter, Fareell and Shapiro (1988), Higgins, Johnson and Sullivan (2005), Mizuno (2009), Fridolfsson and Stennek (2010).). When considering profitability, researchers introduce the concept of "Insiders' dilemma" or "Merger paradox", which later become one of focuses of researches and they even try to solve this problem (As Stigler (1950), Salant et al (1983), Farrell and Shapiro (1990), Lindqvist and Stennek (2005), Cesi (2010)).…”

“…When considering profitability, researchers introduce the concept of "Insiders' dilemma" or "Merger paradox", which later become one of focuses of researches and they even try to solve this problem (As Stigler (1950), Salant et al (1983), Farrell and Shapiro (1990), Lindqvist and Stennek (2005), Cesi (2010)). Some literature concentrates on concentration or market structure and provides theory support for merger guidelines to some extent (As Huck, Konrad and Muller (2004), Fridolfsson andStennek (2010), Hendricks andMcafee (2010)). Another significant consideration about horizontal merger is welfare and efficiency (As Farrell and Shapiro ( 1988), Zhou (2008), Mizuno (2009), Oldale and Padilla (2010), Verge (2010), Fridolfsson ·and Stennek (2010), Gelves (20 10), Erkal and Piccinin (20 10)).…”

“…Some literature concentrates on concentration or market structure and provides theory support for merger guidelines to some extent (As Huck, Konrad and Muller (2004), Fridolfsson andStennek (2010), Hendricks andMcafee (2010)). Another significant consideration about horizontal merger is welfare and efficiency (As Farrell and Shapiro ( 1988), Zhou (2008), Mizuno (2009), Oldale and Padilla (2010), Verge (2010), Fridolfsson ·and Stennek (2010), Gelves (20 10), Erkal and Piccinin (20 10)). Besides, the character of cost is an important factor affecting horizontal merger and attracts much attention (As Ferreira (2010), Farrell and Shapiro (1988), Gelves (2010)).…”