2018

Threatening to Buy: Private Equity Buyouts and Antitrust Policy

Reprint No. 2018:12

Author(s): Pehr-Johan Norbäck, Lars Persson and Joacim TågYear: 2018 Title: Economics Letters Volume (No.): 164 (March) Pages: 31–34
Online article (restrictions may apply)
Preliminary version


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 merger-stable 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.


Reference:
Norbäck, Pehr-Johan, Lars Persson and Joacim Tåg (2018), "Threatening to Buy: Private Equity Buyouts and Antitrust Policy". Economics Letters 164(March), 31–34.

Pehr-Johan Norbäck

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Lars Persson

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Joacim Tåg

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joacim.tag@ifn.se

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

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The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

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