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Upward Pricing Pressure Formulations with Logit Demand and Endogenous Partial Acquisitions

Author

Listed:
  • Fotis, Panagiotis
  • Polemis, Michael
  • Eleftheriou, Konstantinos

Abstract

The aim of this paper is to derive the formula of Gross Upward Pricing Pressure Index (GUPPI), used on duopoly markets with differentiated products, when we allow for unilateral equity stakes (expressed as a function of victim's market share) to be endogenously determined. The results show that the unilateral effects of partial acquisitions, as they are measured by GUPPI when the percentage of equity stakes of the acquirer in the target firm is considered endogenous, may be higher than in the case where the said percentage is exogenously determined.

Suggested Citation

  • Fotis, Panagiotis & Polemis, Michael & Eleftheriou, Konstantinos, 2015. "Upward Pricing Pressure Formulations with Logit Demand and Endogenous Partial Acquisitions," MPRA Paper 66049, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:66049
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    File URL: https://mpra.ub.uni-muenchen.de/66049/1/MPRA_paper_66049.pdf
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    References listed on IDEAS

    as
    1. Farrell Joseph & Shapiro Carl, 2010. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-41, March.
    2. Robert Willig, 2011. "Unilateral Competitive Effects of Mergers: Upward Pricing Pressure, Product Quality, and Other Extensions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(1), pages 19-38, August.
    3. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    4. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2014. "Price vs. quantity competition in a vertically related market," Economics Letters, Elsevier, vol. 124(1), pages 122-126.
    5. Hausman, Jerry & Moresi, Serge & Rainey, Mark, 2011. "Unilateral effects of mergers with general linear demand," Economics Letters, Elsevier, vol. 111(2), pages 119-121, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Differentiated Product Markets; GUPPI; Logit Demand; Endogenous Partial Acquisitions;

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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