Effects Of Horizontal Mergers Research Articles

Documenting Horizontal Integration Among Urologists Who Treat Prostate Cancer

Relatively little is known about the extent and effects of horizontal mergers among physician specialists. We developed and implemented a methodology to document changes in physician practice structure resulting from horizontal integration among urology groups. We merged cancer registry records from four large states with Medicare Part B claims to identify all urologists who treated men with prostate cancer. We added information from SK & A surveys and extensive internet searches to assign a practice structure to each urologist-year (2005-2014). Horizontal integration among small urology groups led to a sharp increase in the proportion of urologists who belong to large urology practices with ownership in intensity modulated radiation therapy and/or anatomical pathology services. By 2014, more than half of New Jersey urologists and about 43% of urologists in Florida and Texas were members of such large practices, whereas small percentages (7%-16%) were employed by a health system. In contrast, more than 27% of California urologists were employed but only 17.5% had ownership in intensity modulated radiation therapy and/or pathology services. Importantly, we found our indicators of market share of urologists associated with each practice structure type were highly concordant with indicators of market share based on number of prostate cancer episodes treated by each practice structure type.

A General Model to Assess Unilateral Price Effects of Horizontal Mergers with Vertical Relations

Mergers sometimes affect vertical relations between merging and non-merging firms. Vertically integrated non-merging firms may, for instance, lose its input sales to a downstream rival if the downstream rival merges with another vertically integrated firm. Thus, price responses from non-merging firms could go in the opposite direction to those of the merging parties. Consequently, estimates of unilateral price effects that do not account for these structural changes are incorrect. We extend the standard framework of unilateral price effects of horizontal mergers with linear demand to account for changes in vertical relations between merging and non-merging firms.

Unilateral Effects of Horizontal Mergers with Vertical Relations Between Firms and Other Structural Market Changes

If one firm buys inputs from a competitor, the input price may be used to internalize the competition between the firms. Thus, positive unilateral pricing effects may arise if one firm starts to buy inputs from a competitor. Conversely, unilateral pricing effects may be small if two firms with vertical relations merge, as pre-merger competition is partly internalized through the input price. We present a method for adjusting the formula of Hausman et al. (Econ Lett 111(2):119–121, 2011), in order to predict correct unilateral pricing effects not only for horizontal mergers, but also for structural changes in markets where one firm sells inputs to a rival.

The Impact of Access to Consumer Data on the Competitive Effects of Horizontal Mergers

The influence of firms' ability to employ individualized pricing on the welfare consequences of horizontal mergers is examined in location models, where firms may have access to data that identifies consumers' location parameters. In a two-to-one merger, the merger reduces consumer surplus more when firms can price discriminate based on individual preferences compared to when they cannot. However, the opposite holds true in a three-to-two merger, in which the reduction in consumer surplus is substantially lower with individualized pricing than with uniform pricing. Further, the three-to-two merger requires an even lesser marginal cost reduction to justify when an upstream consumer data provider can make exclusive offers for its data to downstream firms.

Horizontal Mergers, Prices, and Productivity

We use data from the Census of Manufactures (CM) for the ready-mix concrete industry over the period from 1977 to 1992 to study horizontal mergers. Despite being associated with substantial productivity increases, horizontal mergers are also associated with significant price increases at acquired plants. We then make use of the rich data available through the CM and the particular characteristics of the ready-mix concrete industry to undertake a thorough examination of whether the observed price increases are the result of increases in market power. Notably, we find that the price increases resulting from horizontal mergers are restricted to acquisitions occurring after the promulgation of the 1982 Merger Guidelines, which when interpreted in the context of a number of additional analyses, suggests that the price increases are associated with enhanced market power. Based on this finding, we use our results to address conflicting predictions from the theoretical literature considering the interaction between the market power effects and productivity effects of horizontal mergers. Finally, we show that these market power effects cause the revenue based measure of productivity TFPR to significantly overestimate the productivity increasing effects of horizontal mergers at acquired plants and relate these conclusions to results on acquisition dynamics from the firm dynamics literature.

The Control of Community Concentrations Under Regulation No 139/2004

In my paper I examine CONCENTRATIONS OF COMMUNITY DIMENSION: I. THE EVOLUTION OF COMMUNITY MERGER CONTROL SYSTEM. MERGER LEGISLATION AND ITS OBJECTIVES - the evolution of merger legislation and the objectives of merger control policy; II. GENERAL REMARKS ON CONCENTRATIONS OF COMMUNITY DIMENSION; III. THE CONCEPT OF CONCENTRATIONS: 1. The concept of control (under Article 3(2), (3) of the ECMR) and 2. Forms of concentrations: mergers and acquisitions of control; IV. TYPES OF THE ACQUISTIONS OF CONTROL: 1. Sole control and 2. Joint control; V. TURNOVER; VI. ANCILLARY RESTRAINTS. Part II concerns the procedure of control.In part III I have proceeded to THE ASSESSMENT OF COMPATIBILITY OF CONCENTRATIONS WITH THE COMMON MARKET: I. GENERAL FRAMEWORK; II. THE CONCEPT OF THE RELEVANT PRODUCT AND GEOGRAPHIC MARKET: 1. The notion of the relevant market and 2. Evidence to define markets; III. MARKET POWER: 1. The concept of market power, 2. Market shares as a starting point of the analysis of market power, and 3. Other sources of market power; IV. POTENTIAL ANTI-COMPETITIVE EFFECTS OF HORIZONTAL MERGERS; V. COUNTERVAILING FACTORS: 1. Supply structure, 2. Demand structure, and 3. the existence of potential competition (entry barriers and market contestability); VI. EFFICIENCIES; VII. THE CONCEPT OF A DOMINANT POSITION VERSUS THE SLC TEST; VIII. AMERICAN CONCENTRATIONS ANALYSIS, and IX. FRENCH CONCENTRATIONS ANALYSIS. COMPETITIVE AND ECONOMIC BALANCE.

Aplicação de novo modelo simulação de fusões ao transporte aéreo

Este artigo apresenta o Antitrust Mixed Logit Model (AMLM), uma metodologia nova que demonstra como calibrar os parâmetros de um modelo de demanda mixed-logit e simular os efeitos unilaterais decorrentes de uma fusão horizontal. A principal vantagem sobre a versão mais simples que utiliza o modelo logit (Antitrust Logit Model, ALM, desenvolvido por Werden e1994) é a flexibilidade da demanda, o que resulta em elasticidades mais plausíveis e, conseqüentemente, previsões mais plausíveis sobre o efeito de fusões. Ao contrário de abordagens econométricas, o AMLM compartilha com o ALM atributos interessantes para autoridades de defesa da concorrência: requer poucos dados e é rápido de processar. Utilizam-se dados fictícios para ilustrar a operação, principais inputs e outputs do AMLM e comparar os resultados com outros modelos como ALM e o PCAIDS (Proportionally Calibrated Almost Ideal Demand System). Adicionalmente, aplica-se o modelo AMLM às simulações entre várias empresas que compõem o mercado de transporte aéreo de passageiros, incluindo a recente fusão real entre GOL e WEBJET.

An Empirical Analysis of the Effects of Horizontal Mergers and Acquisitions on the Performance of Chinese Listed Companies - The Case of the 2008 Global Financial Crisis

(ProQuest: ... denotes formulae omitted.)1. IntroductionThe names of the top ten mergers and acquisitions (M & A) companies in China in any year are announced in January of the following year. The assessments of the mergers and acquisition companies to select the top ten is done by the All-China Federation of Industry & Commerce, the global Merger and Acquisition (M & A) Research Center and China M & A network. There are a variety of acquisitions types. According to the statistics database of CVSource, there were 2656 cases of Chinese mergers and acquisitions in 2010. In August of 2011, Google announced the purchase of Motorola with 12.5 billion US dollar. M & A is an important means to expand the scale of operation, reduce competition and enter new areas for companies around the word.M & A refers to the situation where a company takes control of other companies by property rights exchange to increase its competitive capability. It can be divided into mergers and acquisitions. M & A is a complex economic phenomenon. It is a product of the economy development. It is also the most influential corporate behavior in a company's business activities. The phenomena of M & A began in the early stage of the Western industrial economy. Since the 19th century, the world has experienced six M & A waves. Currently, as a result of economic globalization, M & A occurs more frequently in China. There are different types of M & A, namely: horizontal M & A, vertical M & A and mixed M & A (Becher, 2002; Kruse & Park, 2007; Chen, 2011; Li & Zhang, 2012). Currently, almost all of the M & A that occur around the word can be classified into these three categories or types. Different types of M & A result from different motivations. There are mainly two sources of motivations for M & A in China, namely: government promoted M & A and expanding the scale of operation promoted by companies.The sign of the recent global financial crisis began to be felt 2007. After the US Subprime mortgage crisis in 2006, investors began to lose faith in value of mortgage backed securities, which causes liquidity crisis in US. This crisis became out of control with the bankruptcy of Lehman Brothers in September 2009. After that, the global economic was in recession. During the 2008 financial crisis, companies yielded to be bankrupt. This situation led to some specific occurrences of M & A.The purpose of this paper is to analyze the performance of horizontal M & A in the 2008 financial crisis environment. It uses discriminant analysis to build a discriminant function. The function can be used to forecast the possibility of performance improvement of horizontal M & A. Section 2 describes some of the theories of mergers and acquisitions. The paper makes use of these theories in achieving its objectives. Section 3 presents the procedure for selecting samples and financial indicators. The paper will use 24 samples and 9 financial indicators for modelling and another 14 samples for testing. Section 4 presents the basic principles of the multivariate discriminant model and independent samples t-test. Section 5 describes the results of the empirical analysis. The conclusions drawn from the research are presented in section 6.2. Overview Of M & A Theory2.1.Horizontal M & AHorizontal M & A is the mergers and acquisitions between two or more companies that produce and sell the same or similar products, such as the case of Geely purchasing Volvo and Lenovo buying IBM Thinkpad. This type of mergers and acquisitions can help to strengthen the competitiveness of enterprises, reduce competition in the market, improve the industry structure, and expand the scale of operation. However, it destroys free competition and forms a high degree of monopoly. Due to the support of the government, horizontal mergers and acquisitions have developed very quickly in China. …

The sources of gains to M&A in the automotive supply industry: testing collusion versus efficiency theory

In this paper, we examine the wealth effects of horizontal mergers and acquisitions in the automotive supply industry. In order to test the theoretical implications of the competing efficiency and collusion theories, we investigate the cumulative abnormal returns (CAR) induced by M&A announcements on acquiring companies as well as their respective rivals and suppliers. Based on a sample of 205 takeovers, we find that mergers and acquisitions entail positive CAR on acquirers, but lead to negative share price reactions for customers as well as rivals. This result stands in clear contrast to recent studies that are dedicated to the upstream and horizontal effects of takeovers and speaks in favour of the efficiency theory of M&A activity rather than the collusion theory.

Can Horizontal Mergers Without Synergies Increase Consumer Welfare? Cournot and Bertrand Competition Under Uncertain Demand

Abstract We analyze the welfare effects of horizontal mergers in a model wherein firms produce differentiated products and possess asymmetric information about uncertain market demand. Mergers do not bring about synergies or cost savings, but do allow firms to share their market demand information. We find that under Cournot competition, mergers without synergies could increase expected consumer surplus and social welfare, provided that market volatility is sufficiently large. The parameter spaces in which mergers are beneficial to consumers and society widen when products are more differentiated. In contrast, under Bertrand competition, mergers are always welfare reducing regardless of the degree of market volatility and extent of product differentiation. The driving force for the contrasting results lies in opposing welfare effects of information sharing in the contexts of quantity and price setting.

On Welfare Effects of Horizontal Mergers with Product Differentiation

We use a non-spatial (Chamberlinian) product differentiation model to analyze the welfare effects of horizontal mergers with quantity competition. We argue that (i) mergers can be welfare enhancing if the degree of product differentiation increases after the merger; and, (ii) privately profitable mergers can also increase welfare. Consequently, in this paper we demonstrate that the degree of product differentiation is a crucial factor to assess the welfare effects of a merger.

Simulating Partial Asset Divestitures to 'Fix' Mergers

In this paper, we apply and extend merger simulation methodology to analyze the effectiveness of partial divestitures as a 'fix' to remedy the possible anticompetitive effects of horizontal mergers. Typically, antitrust agencies require merging firms to divest assets so that the status quo before the merger is restored, that is, they favor a 'full divestiture'. We focus on the effectiveness of a partial divestiture as an antitrust remedy (where a subset of products owned by the merging firms is spun off). Although this is not the type of full divestiture favored by antitrust agencies, we argue here that a partial divestiture could leave consumers better off after the merger than they were before - under certain conditions. Using a real-world example, we show how divesting a relatively close substitute creates competition that offsets the anticompetitive effects of combining products that are relatively distant substitutes. This result stands even when the divestee is moderately inefficient.

The Use of the Logit Model in Applied Industrial Organization

Qualitative choice models, such as the logit model, can capture important firm and product asymmetries. This paper surveys use of the logit model in industrial organization, with special focus on its application to merger analysis. The basic model and its motivation are reviewed, as is its estimation. Discussed in some detail is the use of the logit model to predict the price and welfare effects of horizontal mergers in differentiated products industries. Simulation using a qualitative choice model is argued to be far superior to traditional structural analysis. Logit merger simulations have the particular virtues of low informational and computational burdens and the use of the logit model can be motivated as reflecting a diffuse prior on the structure of demand.

Mergers, Investments in Cost Reduction and Welfare

For a long time, an important discussion in economics has focused on the welfare effects of horizontal mergers and on policies associated with such mergers. Most researchers seem to agree on a general tradeoff according to which potential cost savings from a merger have to be set against the price-raising effects which frequently result from the corresponding increase in concentration. An influential view suggests that the effect of cost savings can be expected to dominate because cost reduction applies to all inframarginal output. Williamson's (1968) senminal contribution provided reasons for the cost reduction effect to dominate. Hjalmarsson (1976) argued that this conclusion might be particularly plausible for small countries such as those in Scandinavia. However, this traditional approach takes the source and magnitude of cost reductions as exogenous. The main contribution of the present paper is to model endogenously the size of potential cost reductions from a merger. In this respect, it is shown that mergers typically imply cost reductions, but that this effect is outweighed by the adverse decrease in output. Consequently, this paper provides a plausible counter-example to the view that cost savings outweigh output reduction in welfare terms. In general, the structure of cost savings from mergers might differ from case to case and the actual savings might be difficult to observe. Such cost savings can be of a static nature, based on economies of scale or scope, or they can be of a dynamic nature, based on learning or innovative activity. Here, we concentrate on cost savings based on the fact that merger expectations might change fixed cost expenditures on R & D activity, which will affect the level of marginal costs. Proponents of mergers often refer to mergers as necessary to support sufficiently extensive R&D investment

Effects of Horizontal Merger on Price, Profits, and Market Power in a Dominant-Firm Oligopoly

Assuming that all firms have rising marginal costs, merger between a dominant firm and one of the firms in the competitive fringe is considered. The effects on market price and output, profits and market power are shown when the dominant firm operates as a two-plant firm after merger and output arises from both plants. It is proved that if merger offers no efficiency gain, then market price always rises; and if merger results in efficiency gain, then market price falls if and only if there are sufficiently large number of firms in the fringe. In any case, there is profit incentive for merger to take place. [611]