At the end of the last millennium, we experienced a boom in merger and acquisition (M&A) deals in the world. The value of all M&As as a share of world GDP rose from 0.3 per cent in 1980 to 8 per cent in 1999 (World Investment Report, 2000). Market economies with removed trade barriers and efficient communication and transportation accelerated the internationalization and the necessary ensuing market restructuring. However, structural changes as M&As may be harmful to consumers and interventions by competition authorities are thus necessary.
In many cases, it is difficult to measure if and how much consumers will suffer from a certain merger between two firms. One way of measuring the effects on the consumer surplus is to look at rival firms. If rival firms gain from a merger in the industry, consumers can be concluded to lose and vice versa. Naturally, it is also difficult to measure whether rival firms gain from a merger, but there is one way of implicitly observing this. If one firm uses an acquisition strategy, where gains from rivals are necessary, this may be a signal of a harmful merger for consumers. Essay I formalizes this in a theoretical framework and Essay n empirically tests different hypotheses for the theoretical conclusions. In Essay III, an experiment is carried out testing whether profitable mergers do not occur in certain market constellations.
The last chapter, Essay IV, concerns price bubbles in stock markets. Bubble phenomena have many examples in history. Two famous ones are the Dutch "tulipmania" of the 1630s and, more recently, the development of the NASDAQ share index up until March 2000, and the subsequent dramatic loss of value in that market. People have always tried to understand and explain price bubbles but it is problematic in real markets since knowing the fundamental value of a certain asset is essential if a bubble is to be measured. In this essay, the trade is brought to a fictive stock market, i.e. an experimental double-auction asset market, to overcome this problem and tests are made for how inexperienced traders affect prices in these markets.
