We examine a merger between two competitors in a Bertrand‐Edgeworth model. We find that the effects of merger depend on the tightness of capacity constraints. The combination of two firms has no ...price effect if and only if the capacity constraints of all firms are binding both before and after the merger. However, a merger may turn a binding capacity constraint into a slack one, which results in higher prices. In an industry where excess capacity drives the premerger prices of all firms to the marginal cost, a merger may cause prices to rise even though aggregate capacity remains constant. (JEL L13, L40)
This paper focuses on the effect of merger policies in Russia on universities' efficiency. We consider one particular policy of non-voluntary mergers conducted by the Ministry of education based on ...universities' performance indicators. In a first stage, efficiency scores of universities are estimated using a bootstrapped DEA non-parametric technique. The efficiency scores were evaluated for universities that were merged and for an appropriate control group formed through a propensity score matching approach before and after implemented policy. Then, a fuzzy regression discontinuity design is implemented in order to reveal the causal impact of mergers on efficiency level. We find positive, statistically significant effect of merger policy on universities' efficiency. The results of the analysis suggest that merged universities experienced greater efficiency gains (smaller efficiency declines) after the merger was implemented.
We examine the impact of bank mergers on chief executive officer (CEO) compensation during the period 1992–2014, a period characterised by significant banking consolidation. We show that CEO ...compensation is positively related to both merger growth and non‐merger internal growth, with the former relationship being higher in magnitude. While CEO pay–risk sensitivity is not significantly related to merger growth, CEO pay–performance sensitivity is negatively and significantly related to merger growth. Collectively, our results suggest that, through bank mergers, CEOs can earn higher compensation and decouple personal wealth from bank performance. Furthermore, we document a more severe agency problem in CEO compensation as a consequence of bank mergers relative to mergers in industrial firms. Finally, we find that the post‐financial crisis regulatory reform of executive compensation in banks has limited effectiveness in curbing the merger–pay links.
Galaxy interactions and mergers are thought to play an important role in the evolution of galaxies. Studies in the nearby universe show a higher fraction of active galactic nuclei (AGNs) in ...interacting and merging galaxies than in their isolated counterparts, indicating that such interactions are important contributors to black hole growth. To investigate the evolution of this role at higher redshifts, we have compiled the largest known sample of major spectroscopic galaxy pairs (2381 with ΔV < 5000 km s−1) at 0.5 < z < 3.0 from observations in the COSMOS and CANDELS surveys. We identify X-ray and IR AGNs among this kinematic pair sample, a visually identified sample of mergers and interactions, and a mass-, redshift-, and environment-matched control sample for each in order to calculate AGN fractions and the level of AGN enhancement as a function of relative velocity, redshift, and X-ray luminosity. While we see a slight increase in AGN fraction with decreasing projected separation, overall, we find no significant enhancement relative to the control sample at any separation. In the closest projected separation bin (< 25 kpc, ΔV < 1000 km s−1), we find enhancements of a factor of and for X-ray and IR-selected AGNs, respectively. While we conclude that galaxy interactions do not significantly enhance AGN activity on average over 0.5 < z < 3.0 at these separations, given the errors and the small sample size at the closest projected separations, our results would be consistent with the presence of low-level AGN enhancement.
Abstract
The financial crisis has paradoxically protected many sectors of the Greek economy from collapse. The ownership structure of companies in Greece was dominated by state and local government ...companies. Private companies have not only contributed capital and protected employees from unemployment, but have also given a new organisational culture to companies.
Research Diversity and Invention Scott, John T.
Review of industrial organization,
03/2023, Volume:
62, Issue:
2
Journal Article
Peer reviewed
Open access
This paper explains that when there is great uncertainty about which elements of knowledge must be combined to make an invention, the likelihood of invention increases markedly—by many orders of ...magnitude—when there are numerous diverse research organizations, rather than just a few. The paper examines the possibility that competition (antitrust) policy toward mergers would be improved if enforcement efforts placed more emphasis on protecting the diversity that is provided by numerous research rivals in a market.
We examine corporate financial and investment decisions made by female executives compared with male executives. Male executives undertake more acquisitions and issue debt more often than female ...executives. Further, acquisitions made by firms with male executives have announcement returns approximately 2% lower than those made by female executive firms, and debt issues also have lower announcement returns for firms with male executives. Female executives place wider bounds on earnings estimates and are more likely to exercise stock options early. This evidence suggests men exhibit relative overconfidence in significant corporate decision making compared with women.
A new competitive effect of vertical mergers, based on the Nash bargaining model, has begun to play an important role in antitrust authorities’ evaluations of vertical mergers in the United States, ...Canada and abroad. The key idea is that a vertical merger will increase the bargaining leverage of the merged firm over its downstream rivals. Its bargaining leverage increases because it now takes into account the additional profit that its own downstream division will earn if it withholds inputs from downstream rivals, which changes its threat point in the bargaining game with downstream rivals. Consequently, the merged firm can increase the price that it charges rival downstream firms for inputs. One strong appeal of this theory is that it provides a simple and very intuitive formula to measure the upward pricing pressure caused by a vertical merger due to changes in bargaining leverage, based on variables whose values can generally be estimated using available data. This article describes this new competitive effect, which will be called the bargaining leverage over rivals (BLR) effect, and derives the upward pricing pressure formula. It also explains why this new competitive effect is distinct from the older raising rivals’costs (RRC) effect that has been widely discussed in the economics literature, and discusses the relationship between the two different effects.
En matière d’intégration verticale, un nouvel effet concurrentiel fondé sur le modèle de négociation de Nash commence à jouer un rôle prépondérant dans l’évaluation de ce type de fusion par les autorités de la concurrence aux États-Unis, au Canada et ailleurs dans le monde. L’idée directrice est qu’une fusion verticale augmente le levier de négociation de la nouvelle entité par rapport à ses concurrents en aval. Cette situation s’explique par le fait que l’entité fusionnée prend désormais en compte le profit supplémentaire que sa propre division en aval aura accumulé en retenant les intrants de ses concurrents en aval. Dans le jeu de marchandage, et en présence des mêmes parties, son point de désaccord (ou point de menace) s’en trouve donc modifié. Par conséquent, l’entité fusionnée peut augmenter les tarifs des intrants qu’elle applique aux entreprises concurrentes en aval. L’un des principaux avantages de cette théorie est qu’elle offre une formule simple et très intuitive pour mesurer cette pression des prix à la hausse induite par une fusion verticale, et découlant des mutations dans le rapport de force. Cette formule se fonde sur des variables dont les valeurs peuvent généralement être évaluées grâce aux données disponibles. Cet article décrit cette nouvelle donne concurrentielle que nous appellerons « effet de levier de négociation sur la concurrence » (bargaining leverage over rivals, BLR), et développe la formule relative à la pression des prix à la hausse. L'article explique également en quoi ce nouvel effet concurrentiel se distingue de l'ancien effet « d'augmentation des coûts de la concurrence » (raising rivals’ costs, RRC) déjà largement documenté dans la littérature économique, et examine la relation entre les deux.
This paper presents adiscussion of ways of designing atransport network by allied carriers for maritime shipping, specifically examining performance differences between hub-spoke (HS) and ...multiple-port-call (MPC) models. We explain, theoretically, the mechanisms of changing the liner shipping network configuration and the carrier alliances. The salient results indicate the following: (i) HS is more profitable for allied carriers than MPC is; (ii) allied carriers under HS, even if they deploy smaller ships, can have some margin to gain greater profits than under MPC. These findings imply that switching to HS from MPC can be accomplished not only by deploying mega-ships but also through business combinations such as alliances or mergers and acquisitions.
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