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Subject(s)
Economics, politics and business environment
Keyword(s)
buyer mergers, non-linear supply contracts, merger efficiencies, size discounts, waterbed effects
JEL Code(s)
D43, K21, L42
This paper analyzes the welfare implications of buyer mergers, which are mergers between downstream firms from different markets. We focus on the interaction between the merger's effects on downstream efficiency and on buyer power in a setup where one manufacturer with a non-linear cost function sells to two locally competitive retail markets. We show that size discounts for the merged entity has no impact on consumer prices or on smaller retailers, unless the merger affects the downstream efficiency of the merging parties. When the upstream cost function is convex, we find that there are "waterbed effects," that is, each small retailer pays a higher average tariff if a buyer merger improves downstream efficiency. We obtain the opposite results, "anti-waterbed effects," if the merger is inefficient. When the cost function is concave, there are only anti-waterbed effects. In each retail market, the merger decreases the final price if and only if it improves the efficiency of the merging parties, regardless of its impact on the average tariff of small retailers.
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
26
ISSN (Print)
1866–3494
Subject(s)
Technology, R&D management
Keyword(s)
Patent system, patent examination, State Intellectual Property Office China, duration analysis
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
39
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Keyword(s)
tax competition, sales taxes, multinationals, decreasing marginal cost, economies of scale
JEL Code(s)
F12, F23, H25, H71
We examine a multinational firm which has a decreasing marginal cost, and the optimal sales tax policies of the regions where that firm operates. We show that the regions set higher sales taxes than those given by a cooperative equilibrium. Each region fails to fully internalize the effects of its tax level on another region's welfare and the incentives for that region's authority. Exponential cost functions which exhibit economies of scale (for example Cobb-Douglas) and linear demand functions satisfy our assumptions. Our results suggest the need to coordinate sales tax levels between countries and between smaller entities, like states in the United States. Smaller regions benefit more from such coordination. Lowering sales taxes in each region increases welfare for all regions, profits for firms, and consumer welfare.
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
22
ISSN (Print)
1866–3494
Subject(s)
Human resources management/organizational behavior
Keyword(s)
professional transitions, learning methods, leadership development
A pdf file of this working paper may be available at INSEAD.
Pages
29
Subject(s)
Economics, politics and business environment
Keyword(s)
Reference-dependent utility, gain-loss utility, loss aversion, sticky prices, sales, supermarket pricing
JEL Code(s)
D11, D43, D81, L13
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
66
ISSN (Print)
1866–3494
Subject(s)
Economics, politics and business environment
Keyword(s)
information externality, strategic waiting, delay, information cascade, investment boom, optimal taxation
JEL Code(s)
D62, D83
We study a two-player dynamic investment model with information externalities and provide necessary and sufficient conditions for a unique switching equilibrium. Within this setup, we ask whether policymakers should interfere when better informed agents make individual investment decisions. We find that when the public information is sufficiently high and a social planer therefore expects an investment boom, investments should be taxed. Conversely, any positive investment tax is suboptimally high if the public information is sufficiently unfavorable. We also show that an investment tax may increase overall investment activity.
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
46
ISSN (Print)
1866–3494
Subject(s)
Human resources management/organizational behavior
Keyword(s)
Career entrepreneurship, career success, career investments, three ways of knowing
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
32
ISSN (Print)
1866–3494
Subject(s)
Ethics and social responsibility; Strategy and general management
Keyword(s)
Corporate social responsibility, competitive strategy, challenger brand, affective trust
View all ESMT Working Papers in the ESMT Working Paper Series here. ESMT Working Papers are also available via SSRN, RePEc, EconStor, and the German National Library (DNB).
Pages
43
ISSN (Print)
1866–3494
Subject(s)
Human resources management/organizational behavior
Keyword(s)
leader and leadership development, distributed leadership, network building, boundaryless organizations, talent management, corporate universities
A pdf file of this working paper may be available at INSEAD.
Pages
23
Subject(s)
Human resources management/organizational behavior
Keyword(s)
group work, 360-degree assessments, emotional intelligence, reflective space, leadership development, transformation, motivational need systems, clinical paradigm
A pdf file of this working paper may be available at INSEAD.
Pages
30