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Threatening to Buy: Private Equity Buyouts and Antitrust Policy

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Abstract

Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise mergerstable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable – but consumer surplus-enhancing – mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.

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  • Norbäck, Pehr-Johan & Persson, Lars & Tåg, Joacim, 2018. "Threatening to Buy: Private Equity Buyouts and Antitrust Policy," Working Paper Series 1199, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1199
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    Cited by:

    1. Koptyug, Nikita & Persson, Lars & Tåg, Joacim, 2020. "Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    2. Elert, Niklas & Henrekson, Magnus, 2021. "Innovative Entrepreneurship as a Collaborative Effort: An Institutional Framework," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 17(4), pages 330-435, June.
    3. Pehr-Johan Norbäck & Lars Persson & Joacim Tåg, 2025. "Risky business: venture capital, pivoting and scaling," Small Business Economics, Springer, vol. 64(3), pages 1285-1319, March.

    More about this item

    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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