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Author: Michael Mazzeo Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Merger simulations focus on the price changes that result once previously independent competitors set prices jointly and other market participants respond. We consider the incentives for firms to adjust the set of offered products after a merger. Using a model of product choice and pricing, we conduct simulations of equilibrium market outcomes of a merger in a variety of scenarios. Product offering adjustments result in additional effects on profitability and consumer welfare not realized by price responses only, particularly when the merging parties offer relatively similar products pre-merger. Cost synergies may furthermore entail the pro-competitive introduction of additional products.
Author: Michael Mazzeo Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Merger simulations focus on the price changes that result once previously independent competitors set prices jointly and other market participants respond. We consider the incentives for firms to adjust the set of offered products after a merger. Using a model of product choice and pricing, we conduct simulations of equilibrium market outcomes of a merger in a variety of scenarios. Product offering adjustments result in additional effects on profitability and consumer welfare not realized by price responses only, particularly when the merging parties offer relatively similar products pre-merger. Cost synergies may furthermore entail the pro-competitive introduction of additional products.
Author: Francisco Andres Garrido Publisher: ISBN: Category : Economics Languages : en Pages : 242
Book Description
When multi-product firms endogenously choose their product variety, mergers can have welfare effects that go well beyond their immediate impact through prices. The structural models needed to quantify these effects, however, quickly become computationally intractable as the number of products grows. In this paper, I propose a dynamic structural model of multi-product firms and endogenous product variety that bypasses this dimensionality problem. I show that, under a nested logit demand assumption, firms introduce/remove products in a pre-determined order. As a result, the number of products each firm supplies is a sufficient statistic for the identity of the products themselves and, therefore, for all market outcomes and firms’ continuation strategies. I use this result to argue that the strategies and states that need to be considered to solve the model are a small fraction of the whole strategy set and state space, making it possible to estimate the model using standard techniques in structural econometrics. I apply the model to the Ready-To-Eat Cereal Industry and use it to simulate a hypothetical merger between two large players. Results show that ignoring endogenous product variety leads to a 30% overestimation of the post-merger number of products and a 19% underestimation of consumer welfare loss.
Author: Stephen Polasky Publisher: ISBN: Category : Languages : en Pages :
Book Description
We use a two-period model to analyze the short run and long run profitability and welfare consequences of horizontal mergers, where the equilibrium responses to a merger can differ over time. Although firms can anticipate the merger, they can only adjust their capacity in the long run.We find a greater range of profitable mergers than in static models. For a merger to raise welfare, it is sufficient that the short run welfare effects are positive and necessary that the long run effects are positive.We relate these conditions to the inside firms? market shares and the Herfindahl index.
Author: Louis Kaplow Publisher: MIT Press ISBN: 0262049244 Category : Business & Economics Languages : en Pages : 269
Book Description
A fundamental economic reconstruction of merger analysis to strengthen our ability to determine mergers’ likely effects and improve merger regulation. Why rethink merger analysis? Because methods employed throughout the world violate basic precepts of decision analysis and economics. Fundamental principles are underdeveloped, inhibiting research, policy formulation, and merger review. In Rethinking Merger Analysis, Louis Kaplow undertakes a foundational analysis of the questions central to understanding and regulating horizontal mergers and shows why many conventional practices need to be altered or replaced. On the empirical front, Kaplow offers insights, identifies shortcomings, and proposes extensions of existing research. Altogether, merger review can be greatly improved to better identify harmful mergers and avoid thwarting beneficial ones. The correct economic analysis of anticompetitive effects conflicts sharply with the reigning market definition paradigm. This protocol is more deeply flawed than appreciated, readily produces large errors, and can result in uncertainty bounds on challenge thresholds of two orders of magnitude. Merger efficiencies are underanalyzed because of the failure to draw on relevant disciplines and pertinent industry expertise. Postmerger entry’s role is mischaracterized in merger guidelines, and its direct welfare effects are ignored. Entry induced by the prospect of a subsequent buyout has until recently been disregarded. Proper assessment requires a dynamic framing that accounts for a merger regime’s influence on the creation and capabilities of new generations of startups that are central to economic dynamism. This book eschews advocacy and instead focuses on clear thinking—indeed, rethinking—about how to improve merger policy and assessment.
Author: Publisher: Elsevier ISBN: 0323988881 Category : Business & Economics Languages : en Pages : 784
Book Description
Handbook of Industrial Organization Volume 4 highlights new advances in the field, with this new volume presenting interesting chapters. Each chapter is written by an international board of authors. - Part of the renowned Handbooks in Economics series - Chapters are contributed by some of the leading experts in their fields - A source, reference and teaching supplement for industrial organizations or industrial economists
Author: Roger D. Blair Publisher: ISBN: 0199859191 Category : Business & Economics Languages : en Pages : 633
Book Description
The Handbook examines the most important issues that arise in antitrust economics. Leading scholars in the field provide detailed critical analysis of developments across a number of different antitrust topics along with a detailed review of the literature. The Handbook is invaluable as a research and teaching tool.
Author: Felix Montag Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1,300 fewer domestic jobs lost. Jobs need to be worth above $220,000 annually for domestic employment effects to offset consumer harm.
Author: Richard J. Gilbert Publisher: MIT Press ISBN: 026235862X Category : Business & Economics Languages : en Pages : 337
Book Description
A proposal for moving from price-centric to innovation-centric competition policy, reviewing theory and available evidence on economic incentives for innovation. Competition policy and antitrust enforcement have traditionally focused on prices rather than innovation. Economic theory shows the ways that price competition benefits consumers, and courts, antitrust agencies, and economists have developed tools for the quantitative evaluation of price impacts. Antitrust law does not preclude interventions to encourage innovation, but over time the interpretation of the laws has raised obstacles to enforcement policies for innovation. In this book, economist Richard Gilbert proposes a shift from price-centric to innovation-centric competition policy. Antitrust enforcement should be concerned with protecting incentives for innovation and preserving opportunities for dynamic, rather than static, competition. In a high-technology economy, Gilbert argues, innovation matters.
Author: Michael Mazzeo
Author: Michael Mazzeo
Author: Francisco Andres Garrido
Author: Luis Gautier
Author: Stephen Polasky
Author: Louis Kaplow
Author: 
Author: Roger D. Blair
Author: Felix Montag
Author: Daniel Gore
Author: Richard J. Gilbert