Mergers and Acquisitions: The Industrial Organization Perspective

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Kluwer Law International, 2006 - Business & Economics - 235 pages
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Drawing on twenty years of merger analysis literature, this single source offers practical solutions to a wide range of problems faced by specialists working in the field of mergers and acquisitions. The authors take an industrial organization approach in which effects on profits, on consumer surplus and on overall welfare are of greatest relevance. The focus is primarily on horizontal mergers, although vertical and conglomerate mergers are addressed when producers of complementary goods are involved. Among the issues and elements examined, the authors provide answers to the following:
    How does a merger affect the insider firm's profitabifity? Why may outsiders stock market value increase or decrease following a merger? What are the expected welfare effects of a merger? What sort of arguments can be used for merger defense? How do economists model the firm's merging decision? How can the authorities simulate the price effects of a horizontal merger? Is post-merger entry likely to compensate the effects of a merger?

The discussion proceeds from an analysis of the simplest exercise of market power to evermore complex merger environments. In their detailed coverage of policy evaluation of proposed acquisitions, the authors provide a merger simulation toolkit which can be applied to important recent judicial decisions in the field. This book will be of great value not only to academics in microeconomics and industrial organization, but also to lawyers and officials seeking expert practical guidance in the business or administrative responsibilities surrounding mergers and acquisitions.

 

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Contents

Contents
3
Themergerprocessinpractice
5
Definingtherelevantmarket
6
Mergerinvestigation
8
Using merger simulation in the investigation stage
9
Thebook
11
ITheory
13
Quantity Competition
15
Stability
148
Summary
149
Policy
151
Policy Implications
153
ExternalWelfare
154
Consumersurplus
160
Information asymmetry between firms and the an titrustauthority
168
Thedecisionhorizonforantitrustauthorities
170

Mergers between Cournot competitors
18
Mergers under nonCournot conjectures
25
Leadersandfollowers
29
Generalizingdemand
34
Summary
37
3PriceCompetition
41
Other Strategic Variables
55
Producers of Complements
75
6Efficiencies
94
Entry and Exit
123
Entry and differentiatedproducts
130
Exit
133
Failing firms
135
Summary
136
Merger Games
139
Noncooperativegames
140
Mergerwaves
144
NonCournotconjectures
145
Associations
146
Cooperativegames
147
Alternativemergers
172
ImplicationsoftheuseoftheHHI
174
Summary
175
Merger Simulation
177
Homogeneous products and quantitycompetition
179
Increasingmarginalcosts
187
Differentiatedproductsandpricecompetition
189
PCAIDSwithnests
195
AntitrustLOGITALM
197
Summary
201
Merger Cases
207
Therelevantmarket
208
The concentration level before and after the operation
211
Mergersimulation
212
Hypothetical concentration in the food retailing industry
216
The price effects of an increase in market concentration
217
Conclusions
227
Bibliography
229
Copyright

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