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| Author: | Fridolfsson, S. Stennek, J. |
| Title: | Industry concentration and welfare: on the use of stock market evidence from horizontal mergers |
| Journal: | Economica
2010 : OCT, VOL. 77:308 p. 734-750 |
| Index terms: | consumers prices share prices competition |
| Freeterms: | rumours |
| Language: | eng |
| Abstract: | There is diverging empirical evidence on the competitive effects of horizontal mergers: consumer prices (and thus presumably competitors' profits) often rise whereas competitors' share prices fall. This paper proposes a model of endogenous mergers that provides a possible reconciliation. It is demonstrated that anti-competitive 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. |
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