Ec4333 2007 Lecture 8

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Ec4333 2007 Lecture 8

  1. 1. Mergers and Acquisitions Lecture 8
  2. 2. Market Size Matters
  3. 3. Facts
  4. 4. Handout
  5. 5. Economic Logic Verbally Liberalise markets → De-fragmentation → Pro-competitive effect → Industrial restructuring → (M&A, etc.)
  6. 6. Monopoly case
  7. 7. Handout
  8. 8. BE-COMP Diagram
  9. 9. Handout
  10. 10. Economic Logic
  11. 11. State Aid (Subsidies)
  12. 12. Restructuring Prevention
  13. 13. Handout
  14. 14. Restructuring Prevention: Welfare Impact Change producer surplus = zero (profit is zero pre and post). Change consumer surplus = a+d. Subsidy cost = a-c. Total impact = d+c.
  15. 15. EU policies on ‘State Aids’ 1957 Treaty of Rome bans state aid that provides firms with an unfair advantage and thus distorts competition.
  16. 16. Anti-Competitive Behaviour
  17. 17. price Mark-up Demand curve BEFT pmono µmono Perfect A collusion B B pB E” E” p” Partial collusion COMP Number of firms n=1 n” nB Total sales CB
  18. 18. EU Competition Policy
  19. 19. Next Week Inequality in the EU Read: Michie, J., `Unemployment in Europe', in Amin and Tomaney, eds. Behind the Myth of European Union: Prospects for Cohesion, Routledge Press, 1995, pgs. 51--82. 337.14 AMI

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