Abstract

http://ssrn.com/abstract=2292106
 
 

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Merger Externalities in Oligopolistic Markets


Klaus Peter Gugler


Vienna University of Economics and Business Administration; European Corporate Governance Institute (ECGI)

Florian Szücs


German Institute for Economic Research (DIW Berlin)

August 12, 2014

DIW Berlin Discussion Paper No. 1321

Abstract:     
We quantify externalities on profitability and market shares of competing firms in oligopolistic markets through the transition from an n to an n-1 player oligopoly after a merger. Competitors are identified via the European Commission’s market investigations and our methodology allows us to distinguish the externality due to the change in market structure from the merger effect. We obtain results consistent with the predictions of standard oligopoly models: rivals expand their output and increase their profits, whereas merging firms are negatively affected. This indicates that on average the market power effects of large mergers outweigh the efficiencies.

Number of Pages in PDF File: 40

Keywords: oligopolistic competition, rivals, mergers, externalities

JEL Classification: L13, L40, G34

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Date posted: July 11, 2013 ; Last revised: August 27, 2014

Suggested Citation

Gugler, Klaus Peter and Szücs, Florian, Merger Externalities in Oligopolistic Markets (August 12, 2014). DIW Berlin Discussion Paper No. 1321. Available at SSRN: http://ssrn.com/abstract=2292106 or http://dx.doi.org/10.2139/ssrn.2292106

Contact Information

Klaus Gugler
Vienna University of Economics and Business Administration ( email )
Welthandelsplatz 1
Vienna, Wien 1020
Austria
HOME PAGE: http://www.wu.ac.at/iqv/mitarbeiter/gugler
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Florian Szücs (Contact Author)
German Institute for Economic Research (DIW Berlin) ( email )
Mohrenstraße 58
Berlin, 10117
Germany
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