Anticompetitive mergers increase competitors' profits, since they reduce competition. Using a model of endogenous mergers, we show that such mergers nevertheless may reduce the competitors' share-prices. Thus, event-studies can not detect anti-competitive mergers.

This paper tests the insiders' dilemma hypothesis in a laboratory experiment. The insiders' dilemma means that a profitable merger does not occur, because it is even more profitable for each firm to unilaterally stand as an outsider (Kamien and Zang, 1990 and 1993). The experimental data...

We demonstrate a 'preemptive merger mechanism' which may explain the empirical puzzle why mergers reduce profits, and raise share prices. A merger may confer strong negative externalilties on the firms outside the merger. If being an 'insider' is better than being an 'outsider', firms may merge...

The purpose of this report is to contribute to the analysis of two questions. Should a merger control system take into account efficiency gains from horizontal mergers, and balance these gains against the anti-competitive effects of mergers? If so, how should a system be designed to account for...

Markets with imperfect competition do not induce a cost-minimizing allocation of production between firms. The market's ability to rationalize production is even more limited if costs are private information to firms. Merger in such markets generate an efficiency gain associated with the pooling...

Sports organizations, Hollywood studios and TV channels grant satellite and cable networks exclusive rights to televise their matches, movies and media contents. Exclusive distributions prevents viewers from watching attractive programs, and reduces the TV-distributors incentives to compete in...

The purpose of this discussion paper is to contribute to the analysis of two questions. Should a merger control system take into account efficiency gains from horizontal mergers, and balance these gains against the anti-competitive effects of mergers? If so, how should a system be designed to...

We explain the empirical puzzle why mergers reduce profits and raise share prices. If being an “insider” is better than being an “outsider,” firms may merge to preempt their partner merging with a rival. The stock-value of the insiders is increased, since the risk of becoming an outsider...