Preemptive mergers under spatial competition

Brito, Duarte

doi:10.1016/s0167-7187(03)00048-1

Cited by 53 publications

(68 citation statements)

References 12 publications

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“…Second, acquisition may be used to exclude potential rivals from preferential positions in the market. In this case, the goal of the merger is not to increase productivity or research efficiency, but to increase market power (Salant, Switzer, and Reynolds, 1983), or even to preempt mergers by rival companies (Brito, 2003).…”

Section: Literature Reviewmentioning

confidence: 99%

Product Innovation and Survival in a High-Tech Industry

Fontana

Nesta²

2009

Rev Ind Organ

110

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We investigate the relationship between product innovation and firm survival for a sample of 121 firms in a high-tech industry. We find that location near the technological frontier is an important determinant of firm survival. Firms that are located near the frontier are also more likely to be acquired than to exit by liquidation if they cannot survive as free-standing enterprises. This suggests that product location in the technology space acts as a signal of firm quality. Greater R&D efforts increase the probability of surviving; in the event that the firm does exit, however, its R&D efforts do not significantly influence whether it exits via acquisition or exits via liquidation.

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Section: Literature Reviewmentioning

confidence: 99%

Product Innovation and Survival in a High-Tech Industry

Fontana

Nesta²

2009

Rev Ind Organ

110

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“…We consider the case of a bilateral merger between any pair of neighboring banks. Further, Brito (2003) shows that, in a circular city model, closing one of the locations is not profitable for the merged entity. Thus, for analysing the effect of a merger on the risk taking behaviour of banks, we make the following assumption.…”

Section: Bank Mergermentioning

confidence: 99%

“…The effects of mergers in spatial competition models are studied, among others, by Levy and Reitzes (1992) and Brito (2003). It is shown that mergers generally lead to a price increase.…”

Section: Bank Mergermentioning

confidence: 99%

“…Thus, we find it more appropriate not to make such assumptions in our static model which is essentially of short run in nature. Further, we do not discuss merger profitability since a merger of any pair of neighbouring banks is always profitable in the circular city model (Brito, 2003). Also, it is also well-known that mergers are generally profitable when reaction functions are upward sloping (Deneckere and Davidson, 1985).…”

Section: Proposition 3 For Each Bank In the Deposit Market The Likelmentioning

confidence: 99%

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On the relationship between market power and bank risk taking

2014

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“…Schmalensee, 1978;Lane, 1980;and Urban et al, 1986;Brito, 2003) also suggested that market pioneers can pre-empt entry by being the first to occupy preferred locations. This is especially important at the retail level where strategic retail locations are scarce.…”

Section: Pre-emption Based On Channel Exclusivitymentioning

confidence: 99%

An integrative framework of pre‐emption strategies

Lee

2007

Journal of Strategic Marketing

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This paper performs a review of the various pre-emption strategies prescribed in the economics literature. These are cost superiority, consumers' switching cost, channel exclusivity, environmental barriers of entry and credible commitment to react aggressively. Through our analysis, we develop an integrative framework of the pre-emption strategies that will result in long-term payoffs to the firm.The framework proposes that there are two key dimensions -strategic advantage and strategic focus --and identify five generic types of pre-emption strategies for market incumbents.These are the switching cost, blockade, credible commitment, tie-up, and cost leadership strategies. The pre-emption strategies and the framework presented can assist managerial decision-making for the successful pre-emption of potential competition to complement their existing efforts.

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Preemptive mergers under spatial competition

Cited by 53 publications

References 12 publications

Product Innovation and Survival in a High-Tech Industry

Product Innovation and Survival in a High-Tech Industry

On the relationship between market power and bank risk taking

An integrative framework of pre‐emption strategies

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