Abstract

http://ssrn.com/abstract=1699124
 
 

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Using Rival Effects to Identify Synergies and Improve Merger Typologies


Tomaso Duso


German Institute for Economic Research (DIW Berlin); Duesseldorf Institute for Competition Economics (DICE)

Joseph A. Clougherty


University of Illinois at Urbana-Champaign; Centre for Economic Policy Research (CEPR)

September 28, 2010

WZB Discussion Paper SP II No. 2010-13

Abstract:     
The strategic management literature has found it difficult to differentiate between collusive and efficiency-based synergies in horizontal merger activity. We propose a schematic to classify mergers that yields more information on merger types and merger effects, and that can, moreover, distinguish between mergers characterized largely by collusion-based synergies and mergers characterized largely by effi-ciency-based synergies. Crucial to the proposed measurement procedure is that it encompasses the impact of merger events not only on merging firms – as is custom – but also on non-merging competitor firms (the rivals). Employing the event-study methodology with stock-market data on samples of large horizontal mergers drawn from the US and UK (an Anglo-Saxon sub-sample) and from the European continent, we demonstrate how the proposed schematic can better clarify the nature of merger activity.

Number of Pages in PDF File: 49

Keywords: acquisitions, event-study, mergers, research methods, rivals, synergy

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Date posted: October 30, 2010  

Suggested Citation

Duso, Tomaso and Clougherty , Joseph A., Using Rival Effects to Identify Synergies and Improve Merger Typologies (September 28, 2010). WZB Discussion Paper SP II No. 2010-13. Available at SSRN: http://ssrn.com/abstract=1699124 or http://dx.doi.org/10.2139/ssrn.1699124

Contact Information

Tomaso Duso
German Institute for Economic Research (DIW Berlin) ( email )
Mohrenstraße 58
Berlin, 10117
Germany
Duesseldorf Institute for Competition Economics (DICE) ( email )
Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany
+49 211- 81 10235 (Phone)
+49 211- 81 15499 (Fax)
HOME PAGE: http://sites.google.com/site/tomasoduso/home
Joseph A. Clougherty (Contact Author)
University of Illinois at Urbana-Champaign ( email )
601 E John St
Champaign, IL 61820
United States
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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