Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise mergerstable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable—but consumer surplus-enhancing—mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.
Economics Letters
Threatening to Buy: Private Equity Buyouts and Antitrust Policy
Journal Article
Reference
Norbäck, Pehr-Johan, Lars Persson and Joacim Tåg (2018). “Threatening to Buy: Private Equity Buyouts and Antitrust Policy”. Economics Letters 164, 31–34. doi.org/10.1016/j.econlet.2017.12.027
Norbäck, Pehr-Johan, Lars Persson and Joacim Tåg (2018). “Threatening to Buy: Private Equity Buyouts and Antitrust Policy”. Economics Letters 164, 31–34. doi.org/10.1016/j.econlet.2017.12.027
Authors
Pehr-Johan Norbäck, Lars Persson, Joacim Tåg
