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Horizontal Mergers (horizontal + merger)
Selected AbstractsLARGE IS BEAUTIFUL: HORIZONTAL MERGERS FOR BETTER EXPLOITATION OF PRODUCTION SHOCKS,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 1 2008WEN ZHOU The profitability of horizontal mergers is investigated in a situation in which firms face a production shock and therefore are uncertain about their future costs. I show that, due to production rationalization, small-scale mergers can be profitable if the uncertainty is large. The efficiency gain in production also implies benign welfare consequences. Under cost uncertainty, a profitable merger always improves social welfare if no more than half of the industry's firms are allowed to merge. Finally, I show that the incentives to merge depend on the information structure. Firms are less likely to merge when they possess more information. [source] DIVISIONALIZATION AND HORIZONTAL MERGERS IN A VERTICAL RELATIONSHIP*THE MANCHESTER SCHOOL, Issue 3 2009TOMOMICHI MIZUNOArticle first published online: 5 APR 200 In this paper we evaluate the effects of horizontal mergers in a vertical relationship. Each downstream firm can create autonomous divisions. We show that an infinitesimal merger of downstream firms may exhibit a positive welfare effect if the upstream and downstream sectors are sufficiently unconcentrated. However, any merger of upstream firms reduces social welfare. Moreover, a decrease in the concentration in the upstream stage (respectively downstream stage or non-merging stage) makes the welfare effects of the merger in the upstream stage (respectively downstream stage or non-merging stage) less negative (respectively ambiguous or ambiguous). [source] Horizontal alliances and the merger paradoxMANAGERIAL AND DECISION ECONOMICS, Issue 4 2005James Sawler Mergers and alliances are two organizational forms which allow firms to combine complementary capabilities to realize strategic goals; they are, in many cases, strategic substitutes. Managerial decision-makers, therefore, require a framework for choosing between the two strategies. This paper contributes to this decision-making process by highlighting one advantage of alliances over mergers. Specifically, while the profitability of a cost-reducing horizontal merger is diminished by the resulting expansion of non-merging competitor(s), an alliance, where partners collaborate to reduce costs but sell their product independently, enables its partners to realize the benefits of merging but avoid the problem of strengthening competitors. A model is developed which demonstrates the profitability of establishing such an alliance compared to a merger. The implications of this strategy for antitrust review are briefly discussed. Copyright © 2005 John Wiley & Sons, Ltd. [source] FAILING FIRM DEFENCE WITH ENTRY DETERRENCEBULLETIN OF ECONOMIC RESEARCH, Issue 4 2010Alessandro Fedele K21; L13; L41 ABSTRACT Under the principle of the failing firm defence a merger that would be blocked due to its harmful effect on competition could be nevertheless allowed when (i) the acquired firm is actually failing, (ii) there is no less anticompetitive alternative offer of purchase, (iii) absent the merger, the assets to be acquired would exit the market. We focus on potential anticompetitive effects of a myopic application of the requirement (iii) by studying consequences of a horizontal merger on entry in a Cournot oligopoly with a failing firm. Entry is deterred if the merger is cleared and, when the industry is highly concentrated, consumer welfare is higher under a prohibition because long-run gains due to augmented competition exceed short-run losses due to shortage of output. [source] Mergers with Product Market RiskJOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 3 2006Albert Banal-Estañol This paper studies the causes and the consequences of horizontal mergers among risk-averse firms. The amount of diversification depends on the allocation of shares among the merging firms, with a direct risk-sharing effect and an indirect strategic effect. If firms compete in quantities, consolidation makes firms more aggressive. Mergers involving few firms are then profitable with a relatively low level of risk aversion. With strong enough risk aversion, mergers reduce prices and improve social welfare. If firms instead compete in prices, consumers do not benefit from mergers in markets with demand uncertainty, but can easily benefit with cost uncertainty. [source] Welfare-Reducing Mergers in Differentiated Oligopolies with Free Entry,THE ECONOMIC RECORD, Issue 273 2010NISVAN ERKAL Antitrust authorities regard the possibility of post-merger entry and merger-generated efficiencies as two factors that may counteract the negative effects of horizontal mergers. This article shows that in differentiated oligopolies with linear demand, all entry-inducing mergers harm consumer welfare. This is because if there is entry following a merger, it implies that the merger-generated efficiencies were not sufficiently large. Mergers which induce exit, owing to sufficiently high cost savings, always improve consumer welfare. [source] LARGE IS BEAUTIFUL: HORIZONTAL MERGERS FOR BETTER EXPLOITATION OF PRODUCTION SHOCKS,THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 1 2008WEN ZHOU The profitability of horizontal mergers is investigated in a situation in which firms face a production shock and therefore are uncertain about their future costs. I show that, due to production rationalization, small-scale mergers can be profitable if the uncertainty is large. The efficiency gain in production also implies benign welfare consequences. Under cost uncertainty, a profitable merger always improves social welfare if no more than half of the industry's firms are allowed to merge. Finally, I show that the incentives to merge depend on the information structure. Firms are less likely to merge when they possess more information. [source] DIVISIONALIZATION AND HORIZONTAL MERGERS IN A VERTICAL RELATIONSHIP*THE MANCHESTER SCHOOL, Issue 3 2009TOMOMICHI MIZUNOArticle first published online: 5 APR 200 In this paper we evaluate the effects of horizontal mergers in a vertical relationship. Each downstream firm can create autonomous divisions. We show that an infinitesimal merger of downstream firms may exhibit a positive welfare effect if the upstream and downstream sectors are sufficiently unconcentrated. However, any merger of upstream firms reduces social welfare. Moreover, a decrease in the concentration in the upstream stage (respectively downstream stage or non-merging stage) makes the welfare effects of the merger in the upstream stage (respectively downstream stage or non-merging stage) less negative (respectively ambiguous or ambiguous). [source] The closed-loop effect and the profitability of horizontal mergersCANADIAN JOURNAL OF ECONOMICS, Issue 3 2003Hassan Benchekroun It is shown that, when firms use open-loop strategies, a merger is profitable only if the share of the market that merges is significant enough. In the case where firms use closed-loop strategies we provide a method to conduct analytically the study of the profitability of horizontal mergers. We first prove the existence of an equilibrium of the game when a subset of firms merges. When firms use feedback strategies, mergers are profitable even when the share of the market that merges is arbitrarily small. JEL Classification:D4, L13 L'effet de la boucle fermée et la profitabilité des fusions horizontales., Ce mémoire étudie la profitabilité des fusions horizontales dans un contexte de concurrence dynamique où les prix sont visqueux. On montre que, quand les entreprises utilisent des stratégies de boucle ouverte, une fusion est profitable seulement si la part du marché qui se fusionne est assez significative. Dans le cas où les entreprises utilisent des stratégies de boucle fermée, on propose une méthode pour étudier analytiquement la profitabilité des fusions horizontales. On prouve d'abord l'existence d'un équilibre du jeu quand un sous-ensemble d'entreprises se fusionne. Quand les entreprises utilisent des stratégies de rétroaction, les fusions sont profitables même quand la part de marché qui se fusionne est arbitrairement petite. [source] | ||||||||||