The Department of Economics cordially invites you to the ad-hoc Economics Research Seminar (Department Seminar), with Richard Kališ (University of Economics Bratislava) on "Merger dilemma in yardstick competition" 

Date: Wednesday, May 17^th

Time: 2.00 to 3.30 pm (CET)

Location: building D4/entrance A, 2^nd floor, room D4.2.008

Abstract: The paper contributes to the literature on mergers in a yardstick competition. The yardstick method is an appealing incentive-based approach; however, it is not immune to potential strategic behaviour concerning horizontal mergers. Because firms in frontier-based regulated industries are evaluated to the most efficient peers, this frontier is prone to inward shifts after mergers. This inward shift can easily overwhelm the expected cost savings of merged firms. The position of the efficient peer being merged is crucial concerning other peers on the frontier. Moreover, compared to the competitive markets, the number of firms outside the merger negatively correlates with industry outcomes after the merger. Our results can serve as a guideline for mergers in yardstick competition similar to one proposed by European Commission for competitive industries.