nep-ind New Economics Papers
on Industrial Organization
Issue of 2007‒08‒08
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The Price Effects of Horizontal Mergers: A Survey By Matthew Weinberg
  2. Cournot competition among multiproduct firms:specialization through licensing By Luigi Filippini
  3. On Mergers in Consumer Search Markets By Maarten C.W. Janssen; José Luis Moraga-González
  4. First Evidence of Asymmetric Cost Pass-through of EU Emissions Allowances : Examining Wholesale Electricity Prices in Germany By Georg Zachmann; Christian von Hirschhausen

  1. By: Matthew Weinberg (University of Georgia)
    Abstract: This paper surveys the literature on the price effects of horizontal mergers. The majority of mergers that have been examined in the nine studies conducted over the past 22 years resulted in increased prices for both the merging parties and rival firms, at least in the short run. There is some evidence that product prices increase after mergers are announced but before they are consummated.
    Date: 2007–01
  2. By: Luigi Filippini (DISCE, Università Cattolica)
    Abstract: In a duopoly where each firm produces substitute goods, we show that under process innovation, specialization is the equilibrium attained with cross-licensing. Each firm produces only the good for which it has an advantage. Patent pool extension confirms the results.
    Keywords: cross-licensing, patent pool, specialization, process innovation
    JEL: D45 O31
    Date: 2006–12
  3. By: Maarten C.W. Janssen (Erasmus Universiteit Rotterdam); José Luis Moraga-González (University of Groningen, and CESifo)
    Abstract: We study mergers in a market where <I>N</I> firms sell a homogeneous good and consumers search sequentially to discover prices. The main motivation for such an analysis is that mergers generally affect market prices and thereby, in a search environment, the search behavior of consumers. Endogenous changes in consumer search may strengthen, or alternatively, offset the primary effects of a merger. Our main result is that the level of search costs are crucial in determining the incentives of firms to merge and the welfare implications of mergers. When search costs are relatively small, mergers turn out not to be profitable for the merging firms. If search costs are relatively high instead, a merger causes a fall in average price and this triggers search. As a result, non-shoppers who didn’t find it worthwhile to search in the pre-merger situation, start searching post-merger. We show that this change in the search composition of demand makes mergers incentive-compatible for the firms and, in some cases, socially desirable.
    Keywords: consnmer search; mergers; price dispersion
    JEL: D40 D83 L13
    Date: 2007–07–16
  4. By: Georg Zachmann; Christian von Hirschhausen
    Abstract: This paper applies the literature on asymmetric price transmission to the emerging commodity market for EU emissions allowances (EUA). We utilize an error correction model and an autoregressive distributed lag model to measure the relationship between CO2 price changes and the development of wholesale electricity prices. Using data from the German market for electricity and EUAs, we find that the rising prices of EUAs have a stronger impact on wholesale electricity prices than falling prices -- the first empirical evidence of asymmetric cost passthrough for these new allowances.
    Date: 2007

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