Ex Post Merger Evaluations and Strategic Pre-Merger Investments

Reprint No. 2012:50

Author(s): Richard Friberg, Pehr-Johan Norbäck and Lars PerssonYear: 2012 Title: Journal of Competition Law and Economics Volume (No.): 8 (4) Pages: 831–848
Online article (restrictions may apply)
Preliminary version

We present a model that warns against a mechanical comparison of pre- and postmerger prices. The starting point of the article is that both the seller and the buyer take into account how the acquisition price is affected by pre-merger investments. We derive conditions under which the selling of a firm triggers overinvestment by both the acquirer and the target. Under Cournot competition, linear demand, and quadratic investment costs, we show that these incentives to overinvest can lead to a lower price in a post-acquisition duopoly than in an ongoing triopoly. This finding suggests a backward-looking efficiency defense in the merger control.

Friberg, Richard, Pehr-Johan Norbäck and Lars Persson (2012), "Ex Post Merger Evaluations and Strategic Pre-Merger Investments". Journal of Competition Law and Economics 8(4), 831–848.

Pehr-Johan Norbäck


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Lars Persson


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Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective


Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

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