Merger profitability and trade policy

We study the profitability and welfare effects of merger in a strategic trade policy environment. Merger changes the strategic trade policy equilibrium. We show that merger can be profitable and welfare enhancing here, even though it is not profitable in a laissez-faire economy. A key element is the change in the governments’ incentives to give subsidies to their local firms. We apply the results to the merger between Boeing and McDonnell-Douglas, where subsidies are a constant matter of debate. Our theory explains why the merger was profitable for Boeing and McDonnell-Douglas, why Airbus Industries opposed the merger, why the US authorities agreed to the merger, and why the EU competition authorities opposed it. -- Wir betrachten die Profitabilität und die Wohlfahrtseffekte von Unternehmensfusionen in einer internationalen Welt, in der Staaten das Instrument strategischer Außenhandelspolitik nutzen. Die Rückwirkungen der Fusionen auf die Wahl der strategischen Außenhandelspolitik machen Fusionen von Unternehmen des gleichen Landes profitabel, selbst wenn diese Fusionen in einer Welt ohne Außenhandelssubventionen nicht profitabel wären. Diese Resultate können erklären, weshalb die Fusion zwischen Boeing und McDonnell-Douglas profitabel war, weshalb Airbus unter der Fusion leidet und weshalb die US-Wettbewerbsbehörde der Fusion gegenüber positiver eingestellt war als die europäische Wettbewerbsbehörde.Merger,strategic trade policy

Strategic Trade Policy and the Home Bias in Firm Ownership Structure

In this note we consider the preferences of a profit maximizing firm for international ownership in a world in which firms compete in an international Cournot oligopoly, and in which countries use strategic trade policy. We find that firms prefer national ownership and show that full indigenisation occurs in the equilibrium.strategic trade, international ownership, Cournot oligopoly, home bias

Merger and collusion in contests

Competition in some product markets takes the form of a contest. If some firms cooperate in such markets, they must decide how to allocate effort on each of their products and whether to reduce the number of their products in the competition. We show how this decision depends on the convexity properties of the contest success function, and we characterize conditions under which cooperation is profitable. -- In vielen Gütermärkten erfolgt der Wettbewerb zwischen Unternehmen nicht primär über Preise und Mengen, sondern über Verkaufsanstrengungen. Ein Beispiel hierfür ist der Kampf um Marktanteile und Kunden in Märkten mit hohen Werbeaufwendungen. Wenn Unternehmen in solchen Märkten kooperieren, müssen sie entscheiden, ob sie ihre gesamte Produktpalette beibehalten und ihre Verkaufsanstrengungen auf alle Produkte verteilen („Kollusion“) oder ob sie die Anzahl ihrer Produkte reduzieren („Fusion“). Wir zeigen, daß diese Entscheidung von den Konvexitätseigenschaften der Funktion abhängt, die den Markterfolg eines Produkts in Abhängigkeit von den Verkaufsanstrengungen für dieses Produkt bzw. für die Konkurrenzprodukte bestimmt, und untersuchen die Bedingungen, in denen Kooperation in Form von „Kollusion“ oder „Fusion“ für die kooperierenden Unternehmen profitabel ist.Contests,merger,collusion,promotional competition,Kampf um Marktanteile,Kollusion,Fusion

Merger in Contests

Competition in some markets is a contest. This paper studies the merger incentives in such markets. Merger can be profitable. The profitability depends on the post-merger contest st ructure, the discriminatory power of the contest and on the number of contestantsContests, merger

Profitable horizontal mergers without cost advantages: The role of internal organization, information, and market structure

Merged firms are typically rather complex organizations. Accordingly, me rger has a more profound effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare – improving even if costs are linear. The driving force behind these results, which help to reconcile theory with various empirical findings, is the assumption that information about output decisions flows more freely within a merged firm. -- Unternehmensfusionen führen häufig zu komplexen Organisationen. Fusionen haben deshalb andere und tiefgründige Wirkungen auf die Marktstruktur. Sie reduzieren nicht einfach die Zahl der Wettbewerber in einem Markt, sondern durch Fusionen entstehen Wettbewerber, die sich wegen ihrer komplexen Organisationsstruktur anders verhalten als jedes der einzelnen Unternehmen vor der Fusion. Wir zeigen in dieser Arbeit, dass horizontale Fusion von Unternehmen aus diesen Gründen profitabel für die fusionierenden Unternehmen und wohlfahrtserhöhend wirken kann, selbst dann, wenn es durch die Fusion keinerlei Kostensynergien gibt. Der Schlüssel für dieses Ergebnis, das eine Theorie für eine Reihe von empirischen Befunden liefert, ist der verbesserte Informationsfluss zwischen Unternehmensteilen des durch die Fusion entstehenden Konzerns im Vergleich zum Informationsfluss zwischen unabhängigen Unternehmen.Merger,internal organizational structure,information,timing,market structure,Fusion,Organisationsstruktur,Informationsfluss,Marktstruktur

Profitable Horizontal Mergers without Cost Advantages: The Role of Internal Organization, Information, and Market Structure

Merged firms are typically rather complex organizations. Accordingly, merger has a more profound effect on the structure of a market than simply reducing the number of competitors. We show that this may render horizontal mergers profitable and welfare-improving even if costs are linear. The driving force behind these results, which help to reconcile theory with various empirical findings, is the assumption that information about output decisions flows more freely within a merged firm.Merger, internal organizational structure, information, timing, market structure

Sea ice-atmospheric interaction: Application of multispectral satellite data in polar surface energy flux estimates

This is the third annual report on: Sea Ice-Atmosphere Interaction - Application of Multispectral Satellite Data in Polar Surface Energy Flux Estimates. The main emphasis during the past year was on: radiative flux estimates from satellite data; intercomparison of satellite and ground-based cloud amounts; radiative cloud forcing; calibration of the Advanced Very High Resolution Radiometer (AVHRR) visible channels and comparison of two satellite derived albedo data sets; and on flux modeling for leads. Major topics covered are arctic clouds and radiation; snow and ice albedo, and leads and modeling

C-band SAR backscatter characteristics of Arctic sea and land ice during winter

Synthetic Aperture Radar (SAR) data has become an important tool for studies of polar regions, due to high spatial resolution even during the polar night and under cloudy skies. We have studied the temporal variation of sea and land ice backscatter of twenty-four SAR images from the European Remote Sensing satellite (ERS-1) covering an area in Lady Ann Strait and Jones Sound, Nunavut, from January to March 1992. The presence of fast ice in Jones Sound and glaciers and ice caps on the surrounding islands provides an ideal setting for temporal backscatter studies of ice surfaces. Sample regions for eight different ice types were selected and the temporal backscatter variation was studied. The observed backscatter values for each ice type characterize the radar signatures of the ice surfaces. This time series of twenty-four SAR images over a 3-month period provides new insights into the degree of temporal variability of each surface. Ice caps exhibit the highest backscatter value of -3.9 dB with high temporal variability. Valley glacier ice backscatter values decrease with decreasing altitude, and are temporally the most stable, with standard deviations of 0.08–0.10 dB over the 90-day period. First-year ice and lead ice show a negative trend in backscatter values in time and a positive correlation of up to 0.59 with air temperature over the 90-day period. For first-year ice and lead ice, episodes of large temperature fluctuations (±12°C) are associated with rapid changes in backscatter values (±2 dB). We attribute the backscatter increase to a temperature-induced increase in brine volume at the base of the snow pack. Multi-year ice, conglomerate ice and shore ice are relatively stable over the 3-month period, with a backscatter variation of only a few dBs. An observed lag time of up to three days between backscatter increase/decrease and air temperature can be attributed to the insulation effect of the snow cover over sea ice. The net range of the backscatter values observed on the most temporally stable surface, valley glacier ice, of about 0.30 dB indicates that the ERS-1 SAR instrument exceeds the 1 dB calibration accuracy specified for the Alaska SAR Facility processor for the three winter months

Modeling and researching the process of plasmachemical recycling of oil wastes based on polychlorinated biphenyls

Theses represents results on thermodynamic simulation of plasmachemical recycling of dielectric oil wastes in air plasma in form of water-organic compositions having optimal composition, lower calorific value minimum 8,4 MJ/kg and adiabatic combustion temperature minimum 1200 °С