Ec4333 2007 Lecture 8
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Ec4333 2007 Lecture 8

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Ec4333 2007 Lecture 8 Ec4333 2007 Lecture 8 Presentation Transcript

  • Mergers and Acquisitions Lecture 8
  • Market Size Matters
  • Facts
  • Handout
  • Economic Logic Verbally Liberalise markets → De-fragmentation → Pro-competitive effect → Industrial restructuring → (M&A, etc.)
  • Monopoly case
  • Handout
  • BE-COMP Diagram
  • Handout
  • Economic Logic
  • State Aid (Subsidies)
  • Restructuring Prevention
  • Handout
  • 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.
  • EU policies on ‘State Aids’ 1957 Treaty of Rome bans state aid that provides firms with an unfair advantage and thus distorts competition.
  • Anti-Competitive Behaviour
  • 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
  • EU Competition Policy
  • 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