Essays on Horizontal Merger Simulation: The Curse of Dimensionality, Retail Price Discrimination, and Supply Channel Stage-games PDF Download
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Author: Geoffrey Michael Pofahl
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ISBN:
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Languages : en
Pages : 349
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The goal of the final essay is to explore the implementation of more realistic supply channel interactions in merger simulations. In particular, a two-stage pricing game is used to conduct merger simulations in the refrigerated orange juice category. The overriding finding is that comparisons with conventionally used models will not be practical until the relationship between demand specification and two-stage game modeling is better understood.
Author: Geoffrey Michael Pofahl
Publisher:
ISBN:
Category :
Languages : en
Pages : 349
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Book Description
The goal of the final essay is to explore the implementation of more realistic supply channel interactions in merger simulations. In particular, a two-stage pricing game is used to conduct merger simulations in the refrigerated orange juice category. The overriding finding is that comparisons with conventionally used models will not be practical until the relationship between demand specification and two-stage game modeling is better understood.
Author: Geoffrey M. Pofahl
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Gang Li
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Category :
Languages : en
Pages :
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Author: Gregory Werden
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Category : Consolidation and merger of corporations
Languages : en
Pages : 42
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Author: Przemyslaw Jeziorski
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Category :
Languages : en
Pages :
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This thesis contributes to understanding the economics of mergers and acquisitions. It provides new empirical techniques to study these processes, based on structural, game theoretical models. In particular, it makes two main contributions. In Chapter 2, I study the issues arising when mergers take place in a two-sided market. In such markets, firms face two interrelated demand curves, which complicates the decision making process and makes standard merger models inapplicable. In Chapter 3, I provide a general framework to identify cost synergies from mergers without using cost data. The estimator is based on a dynamic model with endogenous mergers and product repositioning. Both chapters contain an abstract model that can be tailored to many markets, as well as a specific application to the merger wave in the U.S. radio industry.
Author: Mee Yeon Kim
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ISBN:
Category :
Languages : en
Pages : 87
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This collection of essays considers three issues regarding the performance of the structural merger simulation. The first chapter addresses the underprediction problem of merger simulation by considering more flexible demand models. To be as flexible as possible in modeling the demand, I estimate the full variance--covariance structure of brand preferences and let the brand intercepts to be different across cities to exploit the multi--market structure of data. Compared to a simple logit demand model, a flexible setting allows the predicted price changes to be closer to the actual price changes. In Chapter 2, because the underprediction problem still exists with the flexible structural demand model, I consider the Almost Ideal Demand System as an alternative demand model to determine how the simulation performance differs from that of Chapter 1. I also address the firm-side modeling issues in Chapter 2. I examine, whether incorporating the retailer side in the pricing game would produce improved merger simulation results. In Chapter 3, I separately estimate the effect of several factors compounded in the actual price changes in the post--merger period. I explain that part of the reasons the merger simulation generally fails to result in accurate predictions is that both demand--side factors and supply--side factors considerably affect the post--merger prices.
Author: Chetan Sanghvi
Publisher:
ISBN:
Category :
Languages : en
Pages : 328
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Author: Aleksandra Khimich
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Category :
Languages : en
Pages : 0
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Cartels Damages to the Economy: An Assessment for Developing Countries (Joint with Marc IVALDI, Toulouse School of Economics and CEPR and Frédéric JENNY, ESSEC Business School, Paris) : The detection and sanction of cartels traditionally remains of a high importance for developed anti-trust authorities because of a clear understanding of their potential harm, and therefore of the potential benefits of their deterrence. Nevertheless, developing countries often struggle to create or reinforce their competition authority - running an antitrust division is costly and the supportive evidence concerning the potential benefits is still missing. Present study provides the missing quantitative evidence. It offers an assessment of the aggregate economic harm caused by cartels in developing countries measured in terms of sales affected by collusive practices as well as in terms of cartel excess profits arising from overcharging consumers. The results suggest that the aggregate economic damage estimated in terms of cartels' excess profits can reach almost 1% when divided by the corresponding GDP. Furthermore, as the maximal annual probability of uncovering an already existing cartel is estimated to be around 24%, it is suggested that the actual economic harm exceeds our estimations at least fourfold. / Assessing the accuracy of merger guidelines' screening tools (Joint with Marc Ivaldi, Toulouse School of Economics and Jérôme Foncel, EQUIPPE, University of Lille) : Present study offers a comprehensive assessment of the accuracy of two tools proposed by the most advanced merger guidelines - the traditional HHI test and a more recent UPP test- and attempts to define the economic conditions that favor misleading predictions. Monte-Carlo simulations are used to create economies that are further employed to measure the effects of mergers and to evaluate the performance of the chosen evaluation tools. Results suggest that the HHI test being applied to a market with differentiated products has a very weak performance. In its' turn, the UPP test can also be quite misleading, even if one has perfect information on the main ingredients needed to compute it. It appears that some of type-I and type-II errors occur because the UPP-like tests by construction ignore the pricing pressure experienced by the merging partner. We demonstrate how this can be fixed by taking into account the corresponding cross pass-through rate. / The role of the cross pass-through effects in merger analysis : Present study demonstrates that the ignorance of the cross pass-through effect, and particularly of its sign, can lead to misleading conclusions in almost all stages of merger investigations, including the market definition procedure and the assessment of coordinated and unilateral effects. It offers an examination of the properties of the pass-through matrix in a sufficiently general framework that is convenient for horizontal merger analysis and derives the exact characteristics of both the demand and supply systems that affect the sign of the cross pass-through.
Author: Jinkook Lee
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Category :
Languages : en
Pages :
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This dissertation studies the effects of firm's collaborative strategy on both demand and supply, and equilibrium to derive various welfare implications. I explain both horizontal mergers and vertical relationships, focusing on the U.S. airline industry. In the first study, I address significant limitations of traditional merger simulations which have focused solely on price changes while constraining the set of product characteristics to be identical pre- and post-merger. To overcome the limitations, I endogenize both prices and product characteristics by specifying a two-stage oligopoly game. After estimating demand and supply system, I simulate the effect of the Delta and Northwest Airlines merger on prices, product characteristics, and welfare. The simulation results show that the merged firm tends to increase product differentiation post-merger, the higher product differentiation reduces the firm's incentive to raise prices, and the changes in characteristics and prices increase not only the merged firm's profit but also consumer welfare. I also compare the predicted to actual post-merger outcome and find that endogenizing product characteristics is essential to better predict the actual outcome. The second study investigates the impact of contractual agreements regarding gates between airports and carriers on major carrier's market power. Competition Plans reported by thirty one hub airports provide information on a carrier's gate-occupancy, sublease agreement, and Majority-In-Interest clauses at an airport. I estimate the effects of these contractual practices on passengers' utility and carriers' marginal costs. The main results show that a carrier's gate dominance has a positive effect on the demand side through passengers' utility, and business travelers have a higher willingness to pay for gates than tourists. On the supply side, a carrier's gate dominance decreases its own marginal cost, especially when the airport is congested. Furthermore, the existence of sublease agreement at an airport is likely to increase non-signatory carriers' marginal costs, whereas the provision of Majority-In-Interest clauses increases signatory carriers' marginal costs. Based on the estimates, I execute a counterfactual analysis and find that regulatory limits on gate occupancy can reduce the differentials in costs and profits between signatory and non-signatory airlines. The electronic version of this dissertation is accessible from http://hdl.handle.net/1969.1/152644
Author: Eduardo Pedral Sampaio Fiuza
Publisher:
ISBN:
Category : Consolidation and merger of corporations
Languages : en
Pages : 32
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While often times the Hypothetical Monopolist Test (HMT) utilized in relevant market delineation is implemented with uniform price increases throughout all the goods in the candidate relevant market, since 1984 the versions of the U.S. Merger Guidelines have emphasized that these small but significant and non-transitory increase in prices (SSNIP) should be profit-maximizing, what would result in uniform increases only under very particular conditions. Such increases could then be analyzed-sufficient data existing for such-in the same manner as the simulations of unilateral effects of mergers, introduced in the 1980s and further developed in the 1990s. Thus, in this article, building on structural models of demand and supply and on recent contributions to the literature, we propose a unified framework for merger simulations and for the so-called HMT in its diversity of versions implemented in various countries along the years, and we better detail their differences. To illustrate those differences, we report the results of a Monte Carlo experiment using three demand specifications: isoelastic, linear and linearized Almost Ideal Demand System (AIDS), all of them in a two-stage budget setting. We conclude that the choice of the test version and of the demand specification may affect significantly the size of the relevant market found, depending on the distribution and magnitude of cross and own price elasticities in the potential market.
