...Farell and Shapiro state that there is no necessity for mergers as cooperation and coordination can be achieved at an equivalent level via contracts: “..., modern economic theory observes that virtually anything that can be done with a merger can in principle be done instead with some kind of contract, perhaps a very complex (or restrictive) one.” (Farrell and Shapiro
2001, p. 691)...
6.2 Concluding Remarks
...In the last section I introduce the strand of economic literature that deals with the process of mergers under uncertain efficiency gains. By introducing uncertain synergies to Cournot merger models the merger paradox can be solved in all above presented approaches and compared to the deterministic models there is a wider scope of profitable mergers. The informational asymmetry after the merger benefits the merger members although efficiency gains may be not obtained post merger. Thus mergers are more likely to be beneficial compared to the case where uncertain efficiency gains are not assumed. It has been shown that the incentives to merger coincide with the degree of uncertainty and when firms are aware of this uncertainty they are able to prepare for the post-merger integration
process much better since post-merger actions can be specified more accurately. Any merger with uncertain synergies that needs to be approved by competition agencies can positively affect the approval by evaluating the uncertain efficiency gains with the required post-merger process...
...this may be an attempt to replicate the merger failures in the real world. To analyze further the role of uncertain synergies, models that depart from the one-shut nature should be implemented. This might give insights why merger formations appear wavelike and if the equilibrium changes when non-merged firms adjust as soon as
they observe the true type of their (new) rival. As the world has become realistically more transparent the unmerged firms may observe rather fast whether they face a more or less efficient rival and so the time horizon should ex ante alter the expected profits of the market players compared to the one-shot nature of the standard Cournot game.
The question what types of firms, the most or the least efficient ones are involved in a merger remains unanswered as there are ambiguous results in the theory of endogenous merger formation. The empirical observations also do not support the theory that low-performing firms are the preferred target for acquisitions.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Literature Review
- Industry Structure and it's Implications on Competition
- The Static approach of Industry Structure
- Monopoly
- Cournot Competition
- Bertrand Competition
- The Static approach of Industry Structure
- Horizontal Mergers and the Effects on Quantities and Prices
- The Effect of a Merger within Bertrand competition
- Incentives for a Merger within Bertrand competition
- Complementary Goods
- Incentives to join a Merger
- The Effect of a Merger within Cournot competition
- Incentives for Mergers within Stackelberg games - Solving the Merger Paradox
- Incentives for Mergers - Solving the Merger Paradox
- The Effect of a Merger within Cournot competition on Welfare
- The Effect of a Merger within Bertrand competition
- Horizontal Mergers and Synergies
- Efficiency Gains
- Economies of Scale
- Economies of Scope
- A critical view towards Synergies
- Endogenous Mergers and Efficiency Gains
- Efficiency Gains
- Horizontal Mergers and uncertain Synergies
- Modeling Mergers and uncertain Synergies
- The Bayesian Equilibrium
- Merger with Uncertainty and the Impact of private Information
- The Effects of Uncertainty within Bertrand competition on Welfare
- Modeling Mergers and uncertain Synergies
- Conclusion
- The Role of Uncertainty and the Consequences for Antitrust
- Concluding Remarks
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis delves into the complexities of horizontal mergers, analyzing their impact on competition, market structure, and welfare. It aims to provide a comprehensive understanding of the incentives for mergers, the effects of uncertainty in merger scenarios, and the role of synergies in driving merger decisions. The work also explores the theoretical improvements in modeling mergers, aiming to better reflect real-world scenarios.
- The incentives for mergers and the factors influencing merger decisions.
- The consequences of mergers on market structure, competition, and welfare.
- The role of uncertainty in merger outcomes, particularly regarding future demand, cost efficiencies, and private information.
- The impact of synergies on merger profitability and the distinction between real synergies and pure cost gains.
- The theoretical advancements in modeling mergers to better capture real-world scenarios and address the merger paradox.
Zusammenfassung der Kapitel (Chapter Summaries)
This section provides summaries of the chapters, excluding the conclusion and final chapter.
- Introduction: This chapter sets the stage for the thesis by outlining the importance of mergers and acquisitions in the globalized economy. It highlights the advantages of mergers over other forms of cooperation, such as strategic alliances, and discusses the motivations behind merger activities. The introduction also presents the key questions that will be addressed throughout the thesis.
- Industry Structure and it's Implications on Competition: This chapter provides a theoretical foundation by summarizing the differences between Cournot and Bertrand competition models. These models serve as the basis for analyzing the effects of mergers on market outcomes.
- Horizontal Mergers and the Effects on Quantities and Prices: This chapter explores the impact of mergers on quantities and prices in both Bertrand and Cournot competition models. It examines the incentives for mergers in these contexts, including the merger paradox and attempts to resolve it.
- Horizontal Mergers and Synergies: This chapter delves into the most commonly cited reason for mergers: efficiency gains and synergies. It critically analyzes the concept of synergies, distinguishing between real synergies and pure cost gains. The chapter also explores models that treat the decision to merge as endogenous, aiming to capture the real-world dynamics of merger formation.
- Horizontal Mergers and uncertain Synergies: This chapter focuses on the impact of uncertainty on merger outcomes. It examines how uncertainty about future demand, cost efficiencies, and private information can motivate firms to merge. The chapter also analyzes the effects of uncertainty on welfare.
Schlüsselwörter (Keywords)
Key concepts and topics explored in this thesis include horizontal mergers, competition, market structure, welfare, synergies, efficiency gains, uncertainty, private information, the merger paradox, and theoretical modeling of mergers.
- Quote paper
- Kathrin Tiecke (Author), 2011, Mergers and (uncertain) Synergies in Oligopoly, Munich, GRIN Verlag, https://www.grin.com/document/172820
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