Calendrier du 02 juin 2016
TOM (Théorie, Organisation et Marchés) Lunch Seminar
Du 02/06/2016 de 12:45 à 13:45
BRETON Michèle (HEC Montréal)
Mergers in Nonrenewable Resource Oligopolies and Environmental Policies: A green paradox
We examine the profitability of horizontal mergers within nonrenewable resource industries, which account for a large proportion of merger activites worldwide. We focus on the case of a tripoly where each firm owns a private resource stock of the resource, and firms compete in quantities. We show that a merger is profitable when the resource stock owned by each firm is small enough. We also consider an endogenous merger process and show that monopolization is profitable when the resource stock of each firm is small enough. In the case where pollution is generated by the industry's activity, we show that an environmental policy that increases firms' production cost or reduces the price received by firms can deter a merger and therefore result in larger industry emissions than under a laisser-faire scenario. The impact of such an environmental policy on merger profitability generally depends on the level of the resource stocks. When the stocks are large enough, a tax on extraction reduces the losses from a horizontal merger.