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Strategic Buyers, Horizontal Mergers and Synergies: An Experimental Investigation Author info | Abstract | Publisher info | Download info | Related research | Statistics Douglas D. Davis () (Department of Economics, VCU School of Business)
Bart J. Wilson () (Interdisciplinary Center for Economic Science, George Mason University)
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This paper reports an experiment designed to evaluate interrelationships between strategic buyers, market power and merger-induced synergies. The experiment consists of 40 posted-offer quadropolies. Treatments include the use of simulated or human buyers, seller consolidations and merger-induced fixed cost and unit cost synergies. In the simulated-buyer markets we observe behavior generally consistent with comparative static predictions: prices rise post-merger, and unit (but not fixed) cost synergies may exert some price-moderating effect. The addition of powerful buyers changes results markedly. Although prices are lower in the human buyer markets, outcomes are more variable and predicted comparative static effects are no longer observed.
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Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number
0601.
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Length: 37 pages
Date of creation: Jan 2006Date of revision:
Handle: RePEc:vcu:wpaper:0601Contact details of provider: Postal: Box 844000, Richmond, VA 23284-4000 Phone: 804/828-1717 Web page: http://www.bus.vcu.edu/economics/ More information through EDIRC
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Douglas D. Davis, 2006.
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