Pass-Through of Cost Reductions in Open Auction Markets with Application to Merger Effects PDF Download
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Author: Keith Waehrer
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
Here we analyze how, in an open procurement auction, cost reductions among suppliers bidding to sell to a buyer affect the payoffs to the buyer and suppliers. When a single supplier enjoys a reduction in cost, its increase in expected payoff is equal to the expected increase in total surplus from the cost reduction. The buyer benefits not by capturing a portion of the increase in surplus but instead gains at the expense of the suppliers who do not enjoy the cost decrease. The buyer's benefit from a cost decrease, increases in the concentration among the suppliers who do not enjoy the cost decrease. These results have implications for vertical integration and merger analysis. Increases in concentration increase the incentive of buyers who are integrated upstream to make cost reducing investments in the supply of the good while the investment incentives of non-integrated suppliers remain unchanged. In terms of merger analysis these results suggest that pass through of merger specific cost savings will be higher if the non-merging firms in the market are more concentrated. In addition, mergers increase the incentives for vertically integrated sellers to make cost reducing investments, which may serve to mitigate the anticompetitive effects of a merger.
Author: Keith Waehrer
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
Here we analyze how, in an open procurement auction, cost reductions among suppliers bidding to sell to a buyer affect the payoffs to the buyer and suppliers. When a single supplier enjoys a reduction in cost, its increase in expected payoff is equal to the expected increase in total surplus from the cost reduction. The buyer benefits not by capturing a portion of the increase in surplus but instead gains at the expense of the suppliers who do not enjoy the cost decrease. The buyer's benefit from a cost decrease, increases in the concentration among the suppliers who do not enjoy the cost decrease. These results have implications for vertical integration and merger analysis. Increases in concentration increase the incentive of buyers who are integrated upstream to make cost reducing investments in the supply of the good while the investment incentives of non-integrated suppliers remain unchanged. In terms of merger analysis these results suggest that pass through of merger specific cost savings will be higher if the non-merging firms in the market are more concentrated. In addition, mergers increase the incentives for vertically integrated sellers to make cost reducing investments, which may serve to mitigate the anticompetitive effects of a merger.
Author: Keith Waehrer
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 42
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Book Description
Author: Serdar Dalkir
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
United States antitrust merger analysis has recently focused on simulating the unilateral effects of mergers. We develop a model to simulate the unilateral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S., and calibrate our simulations to known market parameters.We compare the price increases in our model to those suggested by analytically simpler models. The simulation results suggest that the unilateral price increases predicted by our model are modest in general. We also simulate the merger cost savings that are needed to offset the price effects.
Author: Keith Waehrer
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: United States. Federal Energy Regulatory Commission
Publisher:
ISBN:
Category : Energy conservation
Languages : en
Pages : 1642
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Book Description
Author: Kai Hüschelrath
Publisher: Springer Science & Business Media
ISBN: 3790820903
Category : Political Science
Languages : en
Pages : 532
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Book Description
Competition policy is an integral and prominent part of economic policy-making in the European Union. The EU Treaty prescribes its member states to conduct economic policy ‘in accordance with the principle of an open market economy with free competition’. More precisely, the goal of EU competition policy is “to defend and develop effective competition in the common market” (European Commission, 2000: 7). Under its Commissioners van Miert, Monti and, most - cently, Kroes the EU Commission has stepped up its effort to pursue and achieve the aforementioned goal. A number of so-called hard-core cartels, such as the - torious “vitamin cartel” led by Roche, have been detected, tried in violation of Art. 81 of the Maastricht Accord and punished with severe fines. Also Microsoft was hit hard by the strong hand of the Commission having been severely fined for - ploiting a dominant market position. Economic analysis has been playing an increasingly significant role in the Commission’s examination of competition law cases. This holds true in particular for merger control. Here, however, the Commission has had to accept some poi- ant defeats in court, such as the Court’s reversals of Airtours-First Choice or GE- Honeywell. Among other things, the European Court of Justice found the e- nomic analysis as conducted by the EU’s Directorate General for Competition to be flawed and the conclusions drawn not to be convincing. These rejections by the courts have stirred up the scholarly debate on the conceptual foundations of Eu- pean competition policy.
Author: Simon Evenett
Publisher:
ISBN:
Category :
Languages : en
Pages : 20
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Book Description
Mergers and acquisitions represent two important means by which resources are reallocated within capitalist economies. Such combinations can result in lower costs of supply, which are often referred to as efficiencies. However, mergers and acquisitions can also result in the greater exercise of market power by the parties concerned. The latter typically results in higher prices while (marginal or incremental) cost reductions may have the opposite effect. Central to the assessment of the overall likely effect of a merger or acquisition on prices is the extent to which any potential cost reductions of the parties are passed on to customers, the so-called cost pass-through rate. The emphasis in many jurisdictions' merger regulations on combination-specific cost efficiencies and on consumer welfare in evaluating proposed trans-actions puts at a premium our understanding of the degree and determinants of firm-specific cost pass-through to prices. The purpose of this chapter is to describe the available evidence on such pass-through and to consider the implications of this evidence for the conduct of merger reviews.
Author: Abdolkarim Sadrieh
Publisher: Springer Science & Business Media
ISBN: 9783540648956
Category : Business & Economics
Languages : en
Pages : 364
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Book Description
The alternating double auction market institution is presented as a discrete time version of the open outcry market. The game in extensive form is analyzed in an almost perfect information setting, using the concept of subgame perfectness. By applying two new equilibrium selection criteria, a general existence result is obtained for "impatience equilibria" of the game. All such equilibria are shown to have unique properties concerning the traded quantities and prices. The most important results are that the equilibrium prices are independent of the number of traders and are always very close to - if not inside - the range of competitive prices. The latter can be evaluated as game theoretic support for the convergence of prices to the competitive price. The process of price formation is traced by applying the learning direction theory and introducing the "anchor price hypothesis".
Author: Robert Bork
Publisher:
ISBN: 9781736089712
Category :
Languages : en
Pages : 536
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Book Description
The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Author: Lee, In
Publisher: IGI Global
ISBN: 1605661953
Category : Technology & Engineering
Languages : en
Pages : 1211
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Book Description
"This book provides original, in-depth, and innovative articles on telecommunications policy, management, and business applications"--Provided by publisher.
