Ec4333 2007 Lecture 8
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Transcript of Ec4333 2007 Lecture 8
![Page 1: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/1.jpg)
Mergers and Acquisitions
Lecture 8
![Page 2: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/2.jpg)
Market Size Matters
![Page 3: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/3.jpg)
Facts
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Handout
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Economic Logic Verbally
Liberalise markets → De-fragmentation →
Pro-competitive effect → Industrial restructuring →
(M&A, etc.)
![Page 6: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/6.jpg)
Monopoly case
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Handout
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BE-COMP Diagram
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Handout
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Economic Logic
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State Aid (Subsidies)
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Restructuring Prevention
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Handout
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Restructuring Prevention: Welfare Impact
Change producer surplus = zero (profit is zero pre and post).
Change consumer surplus = a+d.
Subsidy cost = a-c.
Total impact = d+c.
![Page 15: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/15.jpg)
EU policies on ‘State Aids’
1957 Treaty of Rome bans state aid that provides firms with an unfair advantage and thus distorts competition.
![Page 16: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/16.jpg)
Anti-Competitive Behaviour
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price
Totalsales
Demand curve
Number of firms
Mark-up
COMP
BEFT
pB
Perfectcollusion
Partialcollusion
E”
nB
µmono
B
n=1 n”
pmono
E”p”
B
CB
A
![Page 18: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/18.jpg)
EU Competition Policy
![Page 19: Ec4333 2007 Lecture 8](https://reader033.fdocuments.net/reader033/viewer/2022052602/559c81f31a28ab7e778b4689/html5/thumbnails/19.jpg)
Next Week
Inequality in the EU
Read: Michie, J., `Unemployment in Europe', in Amin and Tomaney, eds. Behind the Myth of European Union: Prospects for Cohesion, Routledge Press, 1995, pgs. 51--82. 337.14 AMI