Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81181
Authors: 
Fridolfsson, Sven-Olof
Stennek, Johan
Year of Publication: 
2006
Series/Report no.: 
IFN Working Paper 682
Abstract: 
There is diverging empirical evidence on the competitive effects of horizontal mergers: consumer prices (and thus presumably competitors' profits) often rise while competitors' share prices fall. Our model of endogenous mergers provides a possible reconciliation. It is demonstrated that anticompetitive mergers may reduce competitors' share prices, if the merger announcement informs the market that the competitors' lost a race to buy the target. Also the use of first rumor as an event may create similar problems of interpretation. We also indicate how the event-study methodology may be adapted to identify competitive effects and thus, the welfare consequences for consumers.
Subjects: 
Mergers & Acquisitions
Event Studies
Antitrust
In-play
Coalition Formation
JEL: 
G14
G34
L12
L41
Document Type: 
Working Paper

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