Posted by Social Science Research Network
Evaluating Mergers in the Presence of Dynamic Competition Using Impacts on Rivals Darren Filson (Robert Day School of Economics and Finance), Saman Olfati (Claremont McKenna College) & Fatos Radoniqi (Whittier College)
Abstract: We present evidence that event studies can help antitrust agencies forecast impacts of mergers on innovation. In large pharmaceutical mergers, cumulative abnormal returns on portfolios of rivals predict post-merger changes in the combined firm’s R&D intensity. More favorable impacts on rivals are associated with lower intensities, which is consistent with softening competition. Matching merging firms to similar non-merging firms suggests we can attribute the changes in R&D intensity to the mergers. We highlight the importance of deducting “expenses” associated with in-process R&D and provide guidance on how to define rivals, construct portfolios and use event studies in merger evaluations.
Featured News
Redfin Settles $9.2M Commission Inflation Lawsuits
May 7, 2024 by
CPI
DOJ Supports Colorado’s Efforts to Block Kroger-Albertsons Merger
May 7, 2024 by
CPI
Japan Considers Regulation of AI Developers
May 7, 2024 by
CPI
European Commission Extends Decision Deadline for Ita-Lufthansa Merger
May 7, 2024 by
CPI
UK, US and Australia Sanction Senior Leader of LockBit Cybercrime Gang
May 7, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI