How Does Competition Structure Affect Industry Merger Wave? A Network Analysis Perspective

Hou R, Yang J, Yao C, et al. How does competition structure affect industry merger waves? A network analysis perspective[J]. Physica A: Statistical Mechanics and its Applications, 2015, 429: 140-156.

44 Pages Posted: 16 Dec 2013 Last revised: 3 Feb 2016

See all articles by Rui Hou

Rui Hou

Guangdong University of Technology

Jianmei Yang

South China University of Technology

Canzhong Yao

South China University of Technology

Bill McKelvey

KEDGE Business School

Date Written: August 10, 2013

Abstract

By taking China’s beer industry as an example, this paper establishes a series of industrial competition pressure networks and examines the correlation between competition structure and merger actions. We present a cascade dynamic-merger agent-based computational model driven by competition pressure diffusion to describe the forming process of industry merger wave. The empirical analysis and simulation results show that the competition structure among rivals has a strong effect on the scale, the duration time, and the stability of industry merger wave. We also give explanations on why there are different simulation results between in single market competition environment and in multi-market competition environment, as well as discuss the management implications for the industry-merger policy makers and the merger-tactics decision makers that are involved in merger wave.

Keywords: industry merger wave; competitive dynamics; competition pressure diffusion; network analysis method; China’s beer industry

JEL Classification: L16, L22, C44

Suggested Citation

Hou, Rui and Yang, Jianmei and Yao, Canzhong and McKelvey, Bill, How Does Competition Structure Affect Industry Merger Wave? A Network Analysis Perspective (August 10, 2013). Hou R, Yang J, Yao C, et al. How does competition structure affect industry merger waves? A network analysis perspective[J]. Physica A: Statistical Mechanics and its Applications, 2015, 429: 140-156., Available at SSRN: https://ssrn.com/abstract=2367872 or http://dx.doi.org/10.2139/ssrn.2367872

Rui Hou (Contact Author)

Guangdong University of Technology ( email )

No. 100 Waihuan Xi Road
Guangzhou Higher Education Mega Center
Guangzhou, Panyu 510006
China

Jianmei Yang

South China University of Technology ( email )

Wushan
Guangzhou, AR Guangdong 510640
China

Canzhong Yao

South China University of Technology ( email )

Wushan
Guangzhou, AR Guangdong 510640
China

Bill McKelvey

KEDGE Business School ( email )

Domaine de Luminy - BP 921
BP 921
Marseille, PACA 13288
France

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