Multiproduct mergers and quality competition

Multiproduct Competition, Informative Advertising and Cognitive Limitations

Multiproduct Competition, Informative Advertising and Cognitive Limitations In several product categories, such as cereals, ice cream, and detergents, competing firms advertise a variety of products designed to meet the needs of their diverse consumers. Although consumers are exposed to thousands of such product advertisements in a day, they pay attention to only a very small fraction of these ...

Research Joint Ventures, Innovation, and Multiproduct Competition

Bank mergers, competition and liquidity

We provide a model of the impact of bank mergers on loan competition, individual reserve management and aggregate liquidity risk. Banks hold reserves against liquidity shocks, refinance in the interbank market and compete in a differentiated loan market. A merger creates an internal money market that induces financial cost advantages and may increase reserve holdings. We assess the liquidity ri...

Does the Potential for Mergers Reduce Competition?∗

We study the effect of horizontal mergers in a dynamic model with noisy collusion. At each instant firms either privately choose output levels or merge to create a monopoly. In equilibrium, merging trades off the benefits of avoiding price wars against costs of merging, net of higher profits due to lower competition. There are three results. First, mergers are optimal when collusion fails (i.e....

Product Market Synergies and Competition in Mergers and Acquisitions

We examine how product similarity and competition influences mergers and acquisitions and the ability of firms to exploit product market synergies. Using novel text-based analysis of firm 10K product descriptions, we find three key results. (1) Firms are more likely to enter restructuring transactions when the language describing their assets is similar to all other firms, consistent with their...