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Why Event Studies Do Not Detect Anti-Competitive Mergers

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Author Info
Fridolfsson, Sven-Olof () (The Research Institute of Industrial Economics)
Stennek, Johan (The Research Institute of Industrial Economics)

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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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Publisher 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
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Related research
Keywords: Mergers & Acquisitions; Event Studies; Antitrust; Coalition Formation;

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Find related papers by JEL classification:
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

Cited by:
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  1. Tobias Lindqvist & Johan Stennek, 2005. "The Insiders’ Dilemma: An Experiment on Merger Formation," Experimental Economics, Springer, vol. 8(3), pages 267-284, September. [Downloadable!] (restricted)
  2. Lindqvist, Tobias & Stennek, Johan, 2005. "The Insiders' Dilemma: An Experiment on Merger Formation," CEPR Discussion Papers 5016, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. 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. [Downloadable!] (restricted)
  4. Damien Neven, 2002. "Discrepancies Between Markets and Regulators: an Analysis of the First ten Years of EU Merger Control," HEI Working Papers 10-2002, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  5. Tomaso Duso & Damien J. Neven & Lars-Hendrik Röller, 2002. "The Political Economy of European Merger Control: Evidence using Stock Market Data," CIG Working Papers FS IV 02-34, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
    Other versions:
  6. Xavier Boutin & Lionel Janin, 2008. "Are Prices Really Affected by Mergers?," Documents de Travail de la DESE - Working Papers of the DESE 2008-08, Institut National de la Statistique et des Etudes Economiques, D3E, revised Jul 2008. [Downloadable!]
  7. 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). [Downloadable!]
    Other versions:
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