Impact of Horizontal Mergers on Research & Development and Patenting: Evidence from Merger Challenges in the U.S.

This paper contributes further empirical evidence on the effects of mergers on innovation using company level data. Evidence on this issue has implications for the relationship between innovation and market concentration. Our departure from previous work is that we focus on a sample of horizontal mergers whose market concentration impacts were flagged by U.S. antitrust authorities as potentially posing a problem for antitrust law compliance. We employ propensity score matching and difference-in-differences estimation to compare the innovation activities of challenged and non-challenged merger firms to a control group of non-merged firms. We use R&D, patent grants, and citation-weighted patent grants to measure the innovation activities of firms before and after a merger. Our results indicate that the post-merger innovation outcomes of firms whose mergers were challenged are lower than they would have been had the firms not merged. But for non-challenged mergers, or mergers that do not raise concerns about market concentration, post-merger innovation outcomes are not significantly different from what they would have been without a merger.     

Determining profitable products in the retail market with consideration of cash limitation and exhibition periods

In the selection of profitable products, consumer preferences and retailer constraints in products supply must be considered. When data mining algorithms are used to discover the consumer's preferences from transaction database, the results may be biased, if the exhibition period of the products has not be considered. In this study a new method is proposed to adjust the support and confidence coefficients of traditional association rule mining algorithms such as Apriori or FP-growth taking into consideration of common exhibition periods. On the supply side, the retailer may have some limitations in terms of buying and supplying products in the store. In the most recent researches, only the shelf space constraint has been considered. In this study, financing as an important constraint in the retail market and the opportunity cost of money are imported in the selection of profitable products.The researcher's experiment on real world data shows that the number of frequent itemsets increases significantly when products exhibition periods are taken into consideration. In this case, if the retailer considers the opportunity cost of money as 1%, the profitable set composition will be changed by 10%. Also, when the opportunity cost is 1% and the retailer faces cash limitation, the number of products is reduced by 21% in the most profitable set, whereas the new set composition is 29.4% different from the base set.     

One‐Way Compatibility,Two‐Way Compatibility and Entry in Network Industries

We study the strategic choice of compatibility between two initially incompatible network goods in a two‐stage game played by an incumbent and an entrant firm. Compatibility may be achieved by means of a converter. We derive a number of results under different assumptions about the nature of the converter (one‐way vs two‐way), the existence of property rights and the possibility of side payments. With incompatibility, entry deterrence occurs for sufficiently strong network effects. In the case of a two‐way converter, which can only be supplied by the incumbent, incompatibility will result in equilibrium unless side payments are allowed and the network externalities are sufficiently low. When both firms can build a one‐way converter and there are no property rights on the necessary technical specifications, the unique equilibrium involves full compatibility. Finally, when each firm has property rights on its technical specifications, full incompatibility is observed at the equilibrium with no side payments; when these are allowed the entrant sells access to its network to the incumbent which refuses to do the same and asymmetric one‐way compatibility results in equilibrium.     

IS CORPORATISM FEASIBLE?

This paper investigates the effects of cooperation (corporatism) on macroeconomic performance by considering a rather standard policy game between the government and a monopoly union. We stress the shortcomings of the traditional way used to model cooperation in policy games (the maximization of the weighted sum of players’ preferences), which only approximates the Nash product solution. We find that it is difficult to implement corporatism, although it generally increases social welfare, as it often reduces the union's utility. In particular, we show that an inflation‐neutral union will never find it profitable to cooperate with the government, unless side‐payments are considered. The study of this issue, however, is beyond the scope of this paper.     

Differentiation and Cost Asymmetry: Solving the Merger Paradox

This paper investigates the impact of product differentiation and of cost asymmetry on the merger paradox using a Cournot framework. It finds that when all firms share the same costs, two-firm mergers in an n firm market generate at least no profit loss when goods are sufficiently differentiated. This result contrasts with that of Salant, Switzer, and Reynolds (1983) where mergers of strategic substitutes are rarely profitable, and Deneckere and Davidson (1985 Deneckere, Raymond, and Carl Davidson. 1985. Incentives to Form Coalitions with Bertrand Competition. The RAND Journal of Economics 16 (4): 473–486.[Crossref], [Web of Science ®] , [Google Scholar]) where competition among strategic complements yields profitable mergers. Critically, when costs are asymmetric, a merger between an efficient and inefficient firm, with differentiated products, can be more profitable to participants than to excluded rivals. Following this merger, welfare is shown to increase given that the cost asymmetry between insiders is large enough.     

外商直接投资、对外直接投资与国际收支——基于国际收支平衡的我国对外直接投资

在我国,引进外商直接投资和对外直接投资之间存在着严重的不对称性。我国国际收支中投资收益逆差抵消了大量的贸易顺差,在未来贸易顺差和外资流入减少的情况下,这将会导致中国国际收支的恶化。因此,需要大力推进我国的对外直接投资以谋求国际收支平衡。     

Preventing competition using side payments: when non-neutrality creates barriers to entry

Network neutrality is often advocated by content providers, stressing that side payments to Internet Service Providers would hinder innovation. However, we also observe some content providers actually paying those fees. This paper intends to explain such behaviors through economic modeling, illustrating how side payments can be a way for an incumbent content provider to prevent new competitors from entering the market. We investigate the conditions under which the incumbent can benefit from such a barrier-to-entry, and the consequences of that strategic behavior on the other actors: content providers, users, and the Internet Service Provider. We also describe how the Nash bargaining solution concept can be used to determine the side payment.     

中国地区间小学教育投入差异影响因素的实证研究——基于财政能力和财政需求的视角

本文从财政能力和财政需求两方面考察影响小学教育投入的诸多因素,通过建立小学教育投入模型分析财政转移支付各种形式对小学教育投入的影响。研究发现,虽然财力性转移支付的均等化效应最强,但由于地方政府缺乏将财力性转移支付用于小学教育的动力,通过法律约束是促使地方政府加大对小学教育投入的有效方式。     

An Empirical Analysis of Bank Mergers and Cost Efficiency in Taiwan

This study compiled input and output panel data of 46 commercial banks in Taiwan during the period from 1997 to 1999 and used the two-stage method to evaluate the effects of bank mergers on bank efficiency. Generally speaking, a bank’s cost efficiency would be improved if the bank mergers happened between banks with different culture backgrounds. On the other hand, if the mergers happened between homogeneous banks, there would be little financial innovation and the cost efficiency would be unsubstantially improved. Another finding is that small banks have superior performance than larger banks in Taiwan. Also, efficiency would seem to dictate against merger mania.     

Trade Liberalisation,Market Structure and the Incentive to Merge

In this article, we consider whether a movement towards freer international trade generates incentives for firms to merge and if so what forms of merger are most profitable. In a linear Cournot framework, we show that a reduction in trade costs may, but will not necessarily, encourage mergers. Both market structure and the level to which trade costs fall are shown to play a decisive role. Domestic mergers will be encouraged only if the product market is not highly concentrated and trade costs fall below a threshold level. International mergers can be encouraged in any market structure, and are generally more profitable than domestic mergers.     

Foreign entry and domestic welfare: lessons for developing countries

This paper examines the effects of foreign entry, in the form of either imports or direct foreign investment, into an oligopolistic market. Incorporating a possible divergence between private and social costs, it first derives simple conditions under which foreign entry reduces welfare relative to autarky. Then, in a multi-firm Cournot model with linear demand and international cost asymmetries, it shows that foreign entry reduces welfare unless it captures a very large share of the home market. However, it also shows that an optimal tariff can prevent this welfare decline. Some suggestive empirical evidence and extensions to differentiated products and to merger analysis are offered. The paper concludes with implications for trade and investment liberalization, as well as for domestic and international competition policy.     

Managing advertising investments in marketing channels

This paper investigates how should manufacturers optimally allocate resources to retailer-initiated (retailer) advertising through cooperative advertising programs and own (manufacturer) advertising in a bilateral monopoly. Retailer advertising stimulates immediate sales but may also harm long-term (post-advertising) demand, whereas manufacturer advertising aims at building brand equity and stimulates both immediate and long-term sales. A game-theoretic model in which a manufacturer and a retailer set pricing and advertising decisions over a two-period planning horizon is developed to account for the differences between manufacturer and retailer advertising. We characterize equilibrium solutions for four advertising scenarios for the manufacturer, ranging from no investment in any advertising activity to undertaking own advertising and supporting retailer advertising simultaneously. Comparing the two players’ equilibrium strategies and profits across these scenarios, we find that manufacturers should avoid offering exclusively cooperative advertising programs to retailers. When retailer advertising positively influences long-term sales, manufacturers should offer cooperative advertising supports to retailers in addition to undertaking their own advertising. When retailer advertising negatively affects long-term sales, manufacturers can still undertake own advertising and offer cooperative advertising under certain conditions. However, if these conditions are not met, focusing exclusively on own advertising is their best advertising strategy. Retailers also prefer scenarios in which manufacturers advertise, but may choose not to participate in manufacturers’ cooperative advertising programs. This leads to suboptimal outcomes if cooperative advertising programs are not enhanced by additional incentives (e.g., side payments or other services).     

Liquidity Constraints and Investment Opportunities: New Evidence from Large and Small Businesses in the UK

In this paper, we compare the liquidity constraints and investment opportunities for large and small businesses. This is done by examining the relationship between stock liquidity and investment opportunities in a sample of large and small enterprises listed on the London Stock Exchange. We find a positive statistical association between stock liquidity and investment opportunities, regardless of the size of the enterprise. This unique result in the London Stock Exchange suggests that firm size does not influence corporate investment decisions because there is no significant change in the cost of capital between large and small enterprises.     

Executive compensation incentives,risk level and corporate innovation

This paper explores the innovation of Chinese listed companies from the perspectives of CEOs' compensation and corporate risk. We find that executives' salary can effectively promote firms' investment in research and development (R&D), while equity compensation failed to promote corporate R&D investment. Besides, the level of corporate risk has a mediating effect between executives' salary and corporate R&D investment. However, corporate risk level has a moderating effect between equity compensation and corporate R&D investment. When the level of risk is higher than a certain level, the negative impact of executives' equity compensation on innovation input becomes more obvious.     

Developing countries in competition for foreign investment

This study analyzes the competition for foreign direct investment (FDI) among countries at different stages of development. It is assumed that domestic companies in a more-developed country use more capital in production and that wages in a less-developed country are lower. Countries can compete for FDI by increasing the supply of public inputs in the economy, in addition to (or instead of) offering subsidies or tax reliefs to foreign investors. The results reveal that if governments of competing countries are not allowed to discriminate between domestic and foreign firms, there may be situations in which a less-developed economy will attract FDI depending on the labor cost differential and the responsiveness of foreign investor's and domestic companies' output to changes in the supply of public inputs. If tax discrimination between domestic and foreign firms is permitted, both countries will optimally raise the supply of public inputs, but the more-developed country will always win the foreign investment despite higher labor costs. Thus, governments of less-developed countries may have an incentive to work on an international agreement to disallow tax discrimination.     

The Diffusion of a Process Innovation with Gently Declining Production Cost

This paper develops a model to investigate the diffusion process of a cost-reducing process innovation within an industry. Two factors drive the diffusion process. First, the gradually declining production cost with the innovation makes the adoption of the innovation more profitable, and consequently motivates more firms to adopt it over time. Second, the switching from old technology to new technology requires suitable organizational knowledge, which is costly to acquire. This tends to slow down the diffusion. The interaction between the two factors determines the path and the speed of the diffusion process. The model is able to explain three observations in technology diffusion, including (1) the S-shaped diffusion path; (2) the rejection of an innovation by some firms; and (3) unprofitable technology adoption. A policy implication of the model is that, through subsidizing the transfer of relevant knowledge from adopters to non-adopters, government can facilitate the diffusion of innovations and improve social welfare.     

当前我国利用外商直接投资的负效应问题研究

当前由于我国利用外资的环境发生变化,使得我国利用外商直接投资的负效应凸显,主要表现为冲击了民族工业发展、减少了国家财政收入、造成国有资产的流失、隐藏国际收支风险、降低了我国工业结构整体效益以及导致我国环境污染加剧。因此,必须调整引资优惠政策,健全与实施跨国并购的法律保障,发展和完善外商引资产业政策,提高反避税能力和资本管制的效率,以消除这些负效应。     

Potential FDI causing large distortions in domestic production

When a foreign firm enters a domestic market, either via exports or through foreign direct investment (FDI), one factor determining the most favourable entrance mode is the profitability of the market, which may not be directly observed by the foreign firm. If the domestic trade protection policy is within a certain range that causes the foreign entrant's decision to swing between the two entry modes, the final choice will depend on the foreign firm's belief about the profitability. In such a situation, a domestic incumbent firm wishing to prevent FDI will heavily distort its production downward to convince the foreign competitor that the market is not profitable. When making trade policy, such strategic behaviour on the part of the domestic firm should be taken into account.     

金融创新对商业银行风险承担的影响--基于金融创新的分类研究

将银行金融创新分为降低项目监督成本和提高投资回报率两种类型,利用银行在融资市场的博弈均衡模型并结合数值模拟技术,研究两种类型金融创新对银行风险承担的影响。研究结果显示：相对于提高投资回报率的金融创新,降低项目监督成本的金融创新对银行风险承担影响更大,且当投资项目收益率较低时,降低监督成本的金融创新更有利于提高银行资金的使用效率,降低银行风险承担水平。实证结果支持理论模型的结论。     

Setting Upper Limits on Merger Related Efficiencies

The purpose of this paper is to show that a complementary entry analysis could be performed by the authorities when assessing the welfare impacts of a merger. In addition to analyzing the likelihood and impact of post-merger entry by other firms, the authorities could also study pre-merger alternatives for the insiders, that is, to study wether other concentration operations were available but not chosen by the merging or acquiring firms. This may be particularly useful when the authorities are faced with a concentration operation that raises anti-competitive concerns. Insiders will argue that cost reductions are likely to compensate these negative effects. However, if the cost reductions are not firm specific it is possible, in some circumstances, to establish an upper limit on the extent of cost reductions when there are other mergers available. If these mergers were admissible but were dominated by the present one, information is revealed about the extent of cost reductions. This information may lead to the authorities updating their beliefs on efficiencies. Such updates may lead to the modification of the decision to approve or reject the merger.