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on Industrial Organization |
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Issue of 2006‒08‒05
six papers chosen by |
| By: | Tomaso Duso; Klaus Gugler; Burçin Yurtoglu |
| Abstract: | This paper applies a novel methodology to a unique dataset of large concentrations during the period 1990-2002 to assess merger control’s effectiveness. By using data gathered from several sources and employing different evaluation techniques, we analyze the economic effects of the European Commission’s (EC) merger control decisions and distinguish between blockings, clearances with commitments (either behavioral or structural), and outright clearances. We run an event study on merging and rival firms’ stocks to quantify the profitability effects of mergers and merger control decisions. We back up our results and methodology by using alternative measures for the merger’s profitability effects based on balance-sheet data and obtain consistent results. Our findings suggest that outright blockings solve the competitive problems generated by the merger. Remedies are not always effective in solving the market power concerns, at least not on average. Nevertheless, both structural (divestitures) and behavioral remedies do help restore effective competition when correctly applied to anticompetitive mergers during the first investigation phase. Yet, they are on the whole ineffective or even detrimental when applied after the second investigation phase. Finally, remedies - especially behavioral ones - seem to constitute a rent transfer from merging firms to rivals when mistakenly applied to pro-competitive mergers. <br> <br> <i>ZUSAMMENFASSUNG - (Wie wirksam ist die Europäische Fusionskontrolle?) <br> In diesem Beitrag wenden wir eine neue Methodologie auf einen einzigartigen Datensatz von großen Unternehmenskonzentrationen während der Jahre 1990- 2002 an, um die Wirksamkeit der Fusionskontrolle zu untersuchen. Wir benutzen Daten, welche von unterschiedlichen Quellen erfasst worden sind und setzen unterschiedliche Auswertungsmethoden ein, um die ökonomischen Effekte der Fusionskontrollentscheidungen der Europäischen Kommission zu analysieren. Wir unterscheiden zwischen Untersagungen, Genehmigung mit Auflagen (entweder Verhaltensauflagen oder strukturelle) und sofortige Genehmigung. Wir verwenden eine "event study" - Methodologie und untersuchen, wie die Aktienpreise sowohl der fusionierenden Unternehmen als auch der Wettbewerber auf die Ankündigung einer Fusion oder einer besonderen wettbewerbspolitischen Entscheidung reagieren, um die Rentabilitätseffekte von Fusionen und von Fusionskontrollentscheidungen quantitativ zu bestimmen. Wir stützen unsere Resultate und Methodologie, indem wir alternative Maße für die Rentabilitätseffekte der Fusion verwenden, die auf Bilanzdaten basieren und erreichen gleich bleibende Resultate. Unsere Analyse ergibt, dass sofortige Untersagungen das von der Fusion verursachte Wettbewerbsproblem lösen können. Dagegen sind Auflagen nicht immer wirkungsvoll - mindestens nicht im Durchschnitt - um die durch die Fusion erzeugte Markmacht zu begrenzen. Dennoch helfen strukturelle Auflagen wie Abstoßungen von Kapitalvermögen und Verhaltensauflagen, einen "effektiven" Wettbewerb wieder herzustellen, wenn sie richtig auf wettbewerbswidrige Fusionen während der ersten Untersuchungsphase des Fusionskontrollverfahren angewendet werden. Jedoch sind sie im Durchschnitt erfolglos - wenn nicht sogar schädlich - wenn sie nach der zweiten Untersuchungsphase angewendet werden. Schließlich scheinen Abhilfemaßnahmen - besonders Verhaltensauflagen -, ein Rententransfer von den fusionierenden Unternehmen auf ihre Rivalen zu sein, wenn sie irrtümlich Wettbewerb steigernden Fusionen auferlegt werden.</i> |
| Keywords: | Mergers, Merger Control, Remedies, European Commission, Event Studies, Ex-post Evaluation |
| JEL: | L4 K21 G34 C2 L2 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:wzb:wzebiv:spii2006-12&r=ind |
| By: | Richard Schmidtke |
| Abstract: | For several years, an increasing number of firms have been investing in Open Source Software (OSS). While improvements in such a non-excludable public good cannot be appropriated, companies can benefit indirectly in a complementary proprietary segment. We study this incentive for investment in OSS. In particular we ask how (1) market entry and (2) public investments in the public good affect the firms' production and profits. Surprisingly, we find that there exist cases where incumbents benefit from market entry. Moreover, we show the counter-intuitive result that public spending does not necessarily lead to a decreasing voluntary private contribution. |
| Keywords: | Open Source Software, private provision of public goods, Cournot-Nash equilibrium, complements, market entry |
| JEL: | C72 L13 L86 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1756&r=ind |
| By: | Jan K. Brueckner; Ricardo Flores-Fillol |
| Abstract: | This paper presents a simple model of airline schedule competition that circumvents the complexities of the spatial approach used in earlier papers. Consumers choose between two duopoly carriers, each of which has evenly spaced flights, by comparing the combinations of fare and expected schedule delay that they offer. In contrast to the spatial approach, the particular departure times of individual flights are thus not relevant. The model generates a number of useful comparative-static predictions, while welfare analysis shows that equilibrium flight frequencies tend to be inefficiently low. |
| JEL: | L00 L90 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1731&r=ind |
| By: | Evens Salies (Observatoire Français des Conjonctures Économiques) |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fce:doctra:0608&r=ind |
| By: | Sougata Poddar (Department of Economics, National University of Singapore); Ruby Toh |
| Abstract: | This paper considers price and location decisions of competing duopolists through an approach that integrates the traditional inside location and outside location model. One firm locates inside a linear city along with consumers while the other locates outside it. We analyze a location-price simultaneous game as well as a location-then price sequential game and characterize the equilibria in pure strategies. The transport cost are assumed to be linear-quadratic and borne by the consumers. We find the results are contrasting to the traditional inside and outside location models and the stability of the proposed model is intermediate between the two. |
| Keywords: | Inside-outside location model, spatial competition, product differentiation, transportation costs, cross-border shopping |
| JEL: | C72 D43 L13 |
| URL: | http://d.repec.org/n?u=RePEc:nus:nusewp:wp0604&r=ind |
| By: | Stahl, Harald |
| Abstract: | This paper presents new evidence on the formation of producer prices based on a onetime survey that was conducted on a sample of 1200 German firms in manufacturing in June 2004. Most of the firms have price-setting power and apply mark-up pricing. Indexation is negligible. Fixed nominal contracts are the most important reason for postponing a price adjustment. The second most likely reason is coordination failure, which causes more upward than downward stickiness. For every second firm both reasons are important. Firms can be assigned to four different groups according to an increasing complexity of reasons of price stickiness. |
| Keywords: | Price rigidity, cluster analysis |
| JEL: | D40 E30 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp1:4237&r=ind |