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Why Event Studies Do Not Detect Anti-Competitive Mergers

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  • Fridolfsson, Sven-Olof

    ()
    (The Research Institute of Industrial Economics)

  • Stennek, Johan

    (The Research Institute of Industrial Economics)

Abstract

Anticompetitive mergers increase competitors' profits, since they reduce competition. Using a model of endogenous mergers, we show that such mergers nevertheless may reduce the competitors' share-prices. Thus, event-studies can not detect anti-competitive mergers.

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File URL: http://swopec.hhs.se/iuiwop/papers/iuiwop0542.pdf
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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 542.

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Length: 8 pages
Date of creation: 14 Dec 2000
Date of revision:
Handle: RePEc:hhs:iuiwop:0542

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
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Web page: http://www.ifn.se/
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Related research

Keywords: Mergers & Acquisitions; Event Studies; Antitrust; Coalition Formation;

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Cited by:
  1. Panagiotis Fotis & Michael Polemis & Nikolaos Zevgolis, 2011. "Robust Event Studies for Derogation from Suspension of Concentrations in Greece during the Period 1995–2008," Journal of Industry, Competition and Trade, Springer, vol. 11(1), pages 67-89, March.
  2. Lindqvist, Tobias & Stennek, Johan, 2001. "The Insiders' Dilemma: An Experiment on Merger Formation," Research Papers in Economics 2001:8, Stockholm University, Department of Economics.
  3. Duso, Tomaso & Neven, Damien J & Röller, Lars-Hendrik, 2003. "The Political Economy of European Merger Control: Evidence Using Stock Market Data," CEPR Discussion Papers 3880, C.E.P.R. Discussion Papers.
  4. Norbäck, Pehr-Johan & Persson, Lars, 2003. "Cross-Border Acquisitions and Greenfield Entry: Profitability and Stock Market Value," CEPR Discussion Papers 3998, C.E.P.R. Discussion Papers.
  5. Sven-Olof Fridolfsson & Johan Stennek, 2001. "Why Mergers Reduce Profits and Raise Share Prices: A Theory of Preemptive Mergers," CIG Working Papers FS IV 01-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  6. Tobias Lindqvist & Johan Stennek, 2005. "The Insiders’ Dilemma: An Experiment on Merger Formation," Experimental Economics, Springer, vol. 8(3), pages 267-284, September.
  7. Damien Neven, 2002. "Discrepancies Between Markets and Regulators: an Analysis of the First ten Years of EU Merger Control," IHEID Working Papers 10-2002, Economics Section, The Graduate Institute of International Studies.

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