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Mergers

Terms in this set (17)

arbitrage
buying goods in one market and reselling at a higher price in another market.
possibility of price discrimination
what does arbitrage undermine?
coordinated effects
occurs when the structure of the market makes it feasible for sellers or buyers to engage in conscious parallelism
coordinated effects and unilateral effects
two theories of anticompetitive harm resulting from horizontal mergers
cross-elasticity of demand
the relationship between an increase in the price of one thing and the change in the demand for another.
substitutes
when the increase in price of of good A results in an increase in demand for good B, the two goods exhibit positive cross-elasticity of demand. This means what?
complements
when the increase in price of good A results in a decrease in the demand for good B, the two goods exhibit negative cross-elasticity of demand. This means what?
diversion ratio
the fraction of unit sales lost by one product due to an increase in price that is diverted to a second product; a tool used for determining the likelihood of unilateral anticompetitive effects under the HMG.
four-firm concentration ratio
percentage of the market held by the four largest firms in the market. was a bigger deal during the heyday of structuralism.
Hart Scott Rodino Antitrust Improvement Act
a 1976 federal statute, notable for instituting a premerger notification requirement.
Horizontal Merger Guidelines
guidelines explaining approach use to review hztl mergers.
hypothetical monopolist test
analytical tool used to define relevant markets under HMG that asks whethre a hypothetical monopolist over a specified group of products would find it profitable to impose a small but significant and nontransitory increase in price.
maverick
a firm that stimulates competition in market in disproportion to its market share. e.g., firm that has historically refused to go along w price increases attempted by the larger firms in the market, requiring larger firms to lower their prices.
merger
permanent combination of productive assets through integration of share ownership
rapid entrant
under HMG, a firm that is. not currently producing or selling in the mkt but would do so rapidly and w/o incurring significant sunk costs in response to a small but significant and nontransitory increase in price
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