EconPapers    
Economics at your fingertips  
 

Industry Concentration and Welfare - On the Use of Stock Market Evidence from Horizontal Mergers

Johan Stennek (johan.stennek@economics.gu.se) and Sven-Olof Fridolfsson

No 5977, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 rumour' as an event may create similar problems of interpretation. We also indicate how the event-study methodology may be adapted to identiy competitive effects and thus, the welfare consequences for consumers.

Keywords: Mergers & acquisitions; Event studies; Antitrust; In-play; Coalition formation (search for similar items in EconPapers)
JEL-codes: G14 G34 L12 L41 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-com and nep-ind
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://cepr.org/publications/DP5977 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Industry Concentration and Welfare: On the Use of Stock Market Evidence from Horizontal Mergers (2010) Downloads
Working Paper: Industry Concentration and Welfare - On the Use of Stock Market Evidence from Horizontal Mergers (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5977

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5977
orders@cepr.org

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by (repec@cepr.org).

 
Page updated 2024-12-28
Handle: RePEc:cpr:ceprdp:5977