Implications of Unprofitable Horizontal Mergers : a Positive External Effect Does Not Suffice to Clear a Merger!

• Autorzy: Oliver Budzinski , Jürgen-Peter Kretschmer
• Języki publikacji: EN

Abstrakty

EN

Standard analysis of mergers in oligopolies along the lines of the popular Farrell-Shapiro Framework (FSF) relies, regarding its policy conclusions, on the assumption that rational agents will only propose privately profitable mergers. If this assumption were held, a positive external effect of a proposed merger would represent a sufficient condition to allow the merger. However, the empirical picture on mergers and acquisitions reveals a significant share of unprofitable mergers, and economic theory, moreover, demonstrates that privately unprofitable mergers can be the result of rational action. Therefore, we drop this restrictive assumption and allow for unprofitable mergers to occur. This exerts a considerable impact on merger policy conclusions: while several insights of the original analysis are corroborated (e.g., efficiency defense), a positive external effect does not represent a sufficient condition for the allowance of a merger any longer. Applying such a rule would cause a considerable amount of false decisions. (original abstract)

Słowa kluczowe

EN

Mergers and acquisitions; Oligopolies

PL

Fuzje i przejęcia; Oligopole

• Czasopismo: Contemporary Economics
• Rocznik: 2016
• Tom: 10
• Numer: nr 1
• Strony: 13--26

Twórcy

autor

Oliver Budzinski

• Ilmenau University of Technology, Germany

autor

Jürgen-Peter Kretschmer

• Federal Cartel Office, Germany

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Identyfikatory

DOI

10.5709/ce.1897-9254.195