Cross-Border Mergers and Market Segmentation (Replaces CentER DP 2010-096)

This paper shows that cross-border mergers are more likely to occur in industries which serve multiple segmented markets rather than a single integrated market, given that cost functions are strictly convex. The product price rises in the market where an acquisition is made but falls in the other, decreasing the acquisition price of other firms (in contrast to the results in the existing merger literature on integrated markets). Although the sum of consumer surplus across the countries may rise in response to a given acquisition, one of the countries gains at the expense of the other.cross-border mergers;endogenous mergers;competition policy;Cournot competition;economic integration

'The Voracity Effect' and Climate Change: The Impact of Clean Technologies

In the absence of a successful international cooperative agreement over the control of emissions there is a growing interest in the role that clean technologies may play to alleviate the climate change problem. Within a non-cooperative transboundary pollution game, we investigate, analytically and within a numerical example based on empirical evidence, the impact of the adoption of a cleaner technology (i.e., a decrease in the emission to output ratio). We show that countries may respond by increasing their emissions resulting in an increase in the stock of pollution that may be detrimental to welfare. This possibility is shown to arise for a signi cant and empirically relevant range of parameters. It is when the damage and/or the initial stock of pollution are relatively large and when the natural rate of decay of pollution is relatively small that the perverse e¤ect of clean technologies is strongest. Cooperation over the control of emissions is necessary to ensure that the development of cleaner technologies does not exacerbate the free riding behavior that is at the origin of the climate change problem.transboundary pollution;renewable resource;climate change;clean technolo- gies;differential games

Collusion Inducing Taxation of a Polluting Oligopoly

We show that an environmental regulation such as a tax on pollution can act as a collusive device and induce stable cartelization in an oligopolistic polluting industry. We consider a dynamic game where pollution is allowed to accumulate into a stock over time and a cartel that includes all the firms in the industry. We show that a tax on pollution emissions can make it unprofitable for any firm to leave the cartel. Moreover the cartel formation can diminish the welfare gain from environmental regulation. We provide an example where social welfare under environmental regulation and collusion of firms is below social welfare under a laisser-faire policy.pollution tax;oligopoly;cartel formation;coalition formation;differential game

Welfare Effect of Mergers and Trade Liberalization

In a two-country model where firms behave à la Cournot, we show that marginal and non-marginal trade liberalization have different effects on the social desirability of horizontal mergers. Marginal tariff reductions increase (decrease) the desirability of merger at sufficiently low (high) tariff levels. In the neighborhood of free trade, for sufficiently low cost savings from merger, trade liberalization increases the desirability of merger whilst decreasing the profitability, implying that mergers should be actively encouraged by competition authorities. Furthermore, we identify ranges of tariff levels for which, if trade liberalization increases (decreases) the desirability of merger, it necessarily increases (decreases) its profitability.

Adaptation Effectiveness and Free-Riding Incentives in International Environmental Agreements

While an international agreement over the reduction of greenhouse gases (GHGs) emissions proves to be elusive, there is a large and growing support for investment in developing more effective technologies to adapt to climate change. We show that an increase in effectiveness of adaptation will diminish the incentive of individual countries to free-ride on a global agreement over emissions. Moreover, we show that this positive effect of an increase in adaptation's effectiveness can also be accompanied by an increase in the gains from global cooperation over GHGs emissions.adaptation;climate change;international environmental agreements;transboundary pollution

Thwarting endogenous stress: BRCA protects against aldehyde toxicity

Homologous recombination (HR) and the Fanconi Anemia (FA) pathways constitute essential repair pathways for DNA damage, which includes DNA double-stranded breaks (DSB) and inter-strand cross-links (ICL), respectively. Germline mutations affecting a single copy of the HR factors BRCA1 and BRCA2 predispose individuals to cancers of the breast, ovary, prostate, and pancreas. Cells deficient for BRCA proteins display high levels of genome instability due to defective repair of endogenous DSBs and are also exquisitely sensitive to DNA-damaging agents. In addition to their roles in repair of DSBs and ICLs, HR and FA proteins have a genetically separable function in the protection of stalled DNA replication forks from nuclease-mediated degradation (Schlacher et al, ). Although it has been hypothesized that loss of functional HR and ICL repair is the primary cause of cancer in BRCA- and FA-deficient patients (Prakash et al, ), the contribution of replication fork instability associated with the degradation of nascent DNA remains unclear. Two recent papers explain how endogenous toxins render cells vulnerable to genomic instability, which explains how the BRCA/FA pathway suppresses tumorigenesis (Tacconi et al, ; Tan et al, )