Robert Masson | Cornell University (original) (raw)

Papers by Robert Masson

RePEc: Research Papers in Economics, Jul 1, 2013

Journal of the Northeastern Agricultural Economics Council, Oct 1, 1977

International Journal of Industrial …, 2000

United States antitrust merger analysis has recently focused on simulating the unilateral effects... more United States antitrust merger analysis has recently focused on simulating the unilateral effects of mergers. We develop a model to simulate the unilateral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S., and calibrate our simulations to known market parameters.

DESCRIPTION In recent years the Antitrust authorities in the U.S. and EU have been addressing the... more DESCRIPTION In recent years the Antitrust authorities in the U.S. and EU have been addressing the issues involving non-horizontal mergers, which include vertical and conglomerate mergers, including complementary products mergers. The EU commissioned two reports on the economic knowledge about these mergers, totaling over 500 pages. This work has not recognized what we analyze here. Complementary products mergers are guided by the intuition behind Cournot’s complementary monopoly merger analysis. Pre merger there is “double marginalization”; merger leads to lower prices. We show how tenuous this intuition is if applied to oligopolists. We start with Merger Guidelines and three statements from antitrust authorities. We formalize these as theoretical propositions about such mergers. The propositions are: 1) Cournot effects will lower prices; 2) Complementary products mergers will never lead to higher prices (barring specific perverse effects); 3) if these mergers lead to mixed bundling...

RePEc: Research Papers in Economics, 1988

Social Science Research Network, Nov 2, 2004

ABSTRACT We consider strategic behaviour in the rental market for quality-differentiated goods. I... more ABSTRACT We consider strategic behaviour in the rental market for quality-differentiated goods. In his classic analysis Ricardo showed that at the competitive equilibrium the price of the marginal unit is driven to zero. An oligopolistic market structure usually leads to a radically different equilibrium. Deliberate withholding of units often becomes part of a firm's best response, and whenever this occurs, a pure strategy equilibrium fails to exist. A necessary but not sufficient condition for a pure strategy equilibrium to exist is for one firm to own all the best quality units. A mixed strategy equilibrium always exists and the associated payoff is always greater than the competitive payoff. Copyright 1994 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Vill. L. Rev., 1986

This paper represents part of a larger project on market power issues in fluid milk markets funde... more This paper represents part of a larger project on market power issues in fluid milk markets funded by National Science Foundation Grant SES-8111237. Katholieke Universiteit, Leuven, also provided some technical assistance. The authors wish to thank George A. Hay for his insightful comments and criticisms.

Social Science Research Network, Nov 2, 2004

In this article advertiser supported media, such as television, are analyzed as an industry selli... more In this article advertiser supported media, such as television, are analyzed as an industry selling audiences to advertisers. A simple stylized model is used to demonstrate that increased competition leads to less of a price decline (in extreme cases, maybe even a price increase) than would be expected in other industries. This arises because audience diversion introduces terms similar to conjectural variations in equilibrium output. Further, in this model, it is shown that if greater competition makes advertisers better off, it makes media consumers worse off and vice versa. The extension to mixed subscriber-advertiser supported media is demonstrated to lead to similar, albeit attenuated, conclusions.

International Journal of Industrial Organization, Apr 1, 2000

United States antitrust merger analysis has recently focused on simulating the unilateral effects... more United States antitrust merger analysis has recently focused on simulating the unilateral effects of mergers. We develop a model to simulate the unilateral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S., and calibrate our simulations to known market parameters. We compare the price increases in our model to those suggested by analytically simpler models. The simulation results suggest that the unilateral price increases predicted by our model are modest in general. We also simulate the merger cost savings that are needed to offset the price effects.

Applied Economics Letters, 2015

Abstract Providing truthful and unbiased information about the true value of a good to a priori h... more Abstract Providing truthful and unbiased information about the true value of a good to a priori heterogeneous consumers generates a mean-preserving counterclockwise rotation of demand. The welfare analysis of such rotation in monopoly and perfectly competitive models indicates that consumers can lose surplus if they become better informed.

Quantitative Finance Letters, 2016

We propose a structural event study methodology, which explicitly models the interaction of two m... more We propose a structural event study methodology, which explicitly models the interaction of two merger and acquisition (M&A) effects: synergy (total value) and dominance (bargaining power). This interaction simultaneously determines the acquirer's and the target's observed abnormal returns around the transaction announcement. Accordingly, we propose a structural estimation approach of which estimates suggest that acquirers get twice as much gains as targets. The structural parameters are uniquely identified with the reduced forms' coefficients. We use this feature to validate our structural approach. Moreover, the reduced forms' estimates are consistent with the M&A literature. However, the interpretation/intuition from the structural estimates offers a new perspective on how acquirers and targets share synergies. More generally, the structural approach allows testing theories and hypotheses related to M&As under an empirical framework that captures the interdependency of the parties' abnormal returns. The efficiency of the empirical procedure is higher than the efficiency of methods that overlook this interdependency.

The Review of Economics and Statistics, Aug 1, 1990

This paper applies a recursive model of structureentry-performance with structural feedbacks to 6... more This paper applies a recursive model of structureentry-performance with structural feedbacks to 62 Korean manufacturing industries for 1976-81. The results strongly support the market power hypothesis. The results also indicate that, despite active government intervention, the invisible hand is working: structure is evolving as expected with high profits leading to entry and consequently lower profits. However, there is little support for limit pricing hypotheses in this explosively growing economy.

Social Science Research Network, 2015

The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between conc... more The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between concentration and industry profits. There are two competing hypotheses--collusion (Bain 1951) or superior competitors (Demsetz 1973). The New Empirical IO (NEIO) undertakes industry specific structural analyses. Like NEIO, we apply a structural model; like OEIO, we address the collusion versus competition question. We first apply our model to 54 Korean industries separately and then pool the data finding support for both the collusive and superior firm hypotheses. Going beyond this we also find the collusive effect dominates.

Bulletin of Economic Research, 1994

We consider strategic behaviour in the rental market for quality-differentiated goods. In his cla... more We consider strategic behaviour in the rental market for quality-differentiated goods. In his classic analysis Ricardo showed that at the competitive equilibrium the price of the marginal unit is driven to zero. An oligopolistic market structure usually leads to a radically different equilibrium. ...

Abstract-This paper applies a recursive model of structure- entry-performance with structural fee... more Abstract-This paper applies a recursive model of structure- entry-performance with structural feedbacks to 62 Korean manufacturing industries for 1976-81. The results strongly support the market power hypothesis. The results also indi- cate that, despite active government intervention, the invisible hand is working: structure is evolving as expected with high profits leading to entry and consequently lower profits. How- ever, there is little support for limit pricing hypotheses in this explosively growing economy. I. Introduction W E test the structure -> conduct -- perfor- AV, Imance, with feedbacks, paradigm using Korean data. There has been little S -- C -- P -- S research for the "Newly Industrialized" Countries (NICs). (Exceptions include Chou (1988) and Lee (1986).)'NICs present different challenges and opportunities for testing. Korea's growth has been explosive. Its manufacturing sec- tor grew at a real rate of 20% over 1966-77, a 900% increase. The gove...

The Canadian Journal of Economics, 1978

SSRN Electronic Journal, 2015

The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between conc... more The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between concentration and industry profits. There are two competing hypotheses--collusion (Bain 1951) or superior competitors (Demsetz 1973). The New Empirical IO (NEIO) undertakes industry specific structural analyses. Like NEIO, we apply a structural model; like OEIO, we address the collusion versus competition question. We first apply our model to 54 Korean industries separately and then pool the data finding support for both the collusive and superior firm hypotheses. Going beyond this we also find the collusive effect dominates.

RePEc: Research Papers in Economics, Jul 1, 2013

Journal of the Northeastern Agricultural Economics Council, Oct 1, 1977

International Journal of Industrial …, 2000

United States antitrust merger analysis has recently focused on simulating the unilateral effects... more United States antitrust merger analysis has recently focused on simulating the unilateral effects of mergers. We develop a model to simulate the unilateral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S., and calibrate our simulations to known market parameters.

DESCRIPTION In recent years the Antitrust authorities in the U.S. and EU have been addressing the... more DESCRIPTION In recent years the Antitrust authorities in the U.S. and EU have been addressing the issues involving non-horizontal mergers, which include vertical and conglomerate mergers, including complementary products mergers. The EU commissioned two reports on the economic knowledge about these mergers, totaling over 500 pages. This work has not recognized what we analyze here. Complementary products mergers are guided by the intuition behind Cournot’s complementary monopoly merger analysis. Pre merger there is “double marginalization”; merger leads to lower prices. We show how tenuous this intuition is if applied to oligopolists. We start with Merger Guidelines and three statements from antitrust authorities. We formalize these as theoretical propositions about such mergers. The propositions are: 1) Cournot effects will lower prices; 2) Complementary products mergers will never lead to higher prices (barring specific perverse effects); 3) if these mergers lead to mixed bundling...

RePEc: Research Papers in Economics, 1988

Social Science Research Network, Nov 2, 2004

ABSTRACT We consider strategic behaviour in the rental market for quality-differentiated goods. I... more ABSTRACT We consider strategic behaviour in the rental market for quality-differentiated goods. In his classic analysis Ricardo showed that at the competitive equilibrium the price of the marginal unit is driven to zero. An oligopolistic market structure usually leads to a radically different equilibrium. Deliberate withholding of units often becomes part of a firm's best response, and whenever this occurs, a pure strategy equilibrium fails to exist. A necessary but not sufficient condition for a pure strategy equilibrium to exist is for one firm to own all the best quality units. A mixed strategy equilibrium always exists and the associated payoff is always greater than the competitive payoff. Copyright 1994 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Vill. L. Rev., 1986

This paper represents part of a larger project on market power issues in fluid milk markets funde... more This paper represents part of a larger project on market power issues in fluid milk markets funded by National Science Foundation Grant SES-8111237. Katholieke Universiteit, Leuven, also provided some technical assistance. The authors wish to thank George A. Hay for his insightful comments and criticisms.

Social Science Research Network, Nov 2, 2004

In this article advertiser supported media, such as television, are analyzed as an industry selli... more In this article advertiser supported media, such as television, are analyzed as an industry selling audiences to advertisers. A simple stylized model is used to demonstrate that increased competition leads to less of a price decline (in extreme cases, maybe even a price increase) than would be expected in other industries. This arises because audience diversion introduces terms similar to conjectural variations in equilibrium output. Further, in this model, it is shown that if greater competition makes advertisers better off, it makes media consumers worse off and vice versa. The extension to mixed subscriber-advertiser supported media is demonstrated to lead to similar, albeit attenuated, conclusions.

International Journal of Industrial Organization, Apr 1, 2000

United States antitrust merger analysis has recently focused on simulating the unilateral effects... more United States antitrust merger analysis has recently focused on simulating the unilateral effects of mergers. We develop a model to simulate the unilateral price increase from a merger in an auction market. We illustrate our results in the context of hospital mergers in the U.S., and calibrate our simulations to known market parameters. We compare the price increases in our model to those suggested by analytically simpler models. The simulation results suggest that the unilateral price increases predicted by our model are modest in general. We also simulate the merger cost savings that are needed to offset the price effects.

Applied Economics Letters, 2015

Abstract Providing truthful and unbiased information about the true value of a good to a priori h... more Abstract Providing truthful and unbiased information about the true value of a good to a priori heterogeneous consumers generates a mean-preserving counterclockwise rotation of demand. The welfare analysis of such rotation in monopoly and perfectly competitive models indicates that consumers can lose surplus if they become better informed.

Quantitative Finance Letters, 2016

We propose a structural event study methodology, which explicitly models the interaction of two m... more We propose a structural event study methodology, which explicitly models the interaction of two merger and acquisition (M&A) effects: synergy (total value) and dominance (bargaining power). This interaction simultaneously determines the acquirer's and the target's observed abnormal returns around the transaction announcement. Accordingly, we propose a structural estimation approach of which estimates suggest that acquirers get twice as much gains as targets. The structural parameters are uniquely identified with the reduced forms' coefficients. We use this feature to validate our structural approach. Moreover, the reduced forms' estimates are consistent with the M&A literature. However, the interpretation/intuition from the structural estimates offers a new perspective on how acquirers and targets share synergies. More generally, the structural approach allows testing theories and hypotheses related to M&As under an empirical framework that captures the interdependency of the parties' abnormal returns. The efficiency of the empirical procedure is higher than the efficiency of methods that overlook this interdependency.

The Review of Economics and Statistics, Aug 1, 1990

This paper applies a recursive model of structureentry-performance with structural feedbacks to 6... more This paper applies a recursive model of structureentry-performance with structural feedbacks to 62 Korean manufacturing industries for 1976-81. The results strongly support the market power hypothesis. The results also indicate that, despite active government intervention, the invisible hand is working: structure is evolving as expected with high profits leading to entry and consequently lower profits. However, there is little support for limit pricing hypotheses in this explosively growing economy.

Social Science Research Network, 2015

The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between conc... more The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between concentration and industry profits. There are two competing hypotheses--collusion (Bain 1951) or superior competitors (Demsetz 1973). The New Empirical IO (NEIO) undertakes industry specific structural analyses. Like NEIO, we apply a structural model; like OEIO, we address the collusion versus competition question. We first apply our model to 54 Korean industries separately and then pool the data finding support for both the collusive and superior firm hypotheses. Going beyond this we also find the collusive effect dominates.

Bulletin of Economic Research, 1994

We consider strategic behaviour in the rental market for quality-differentiated goods. In his cla... more We consider strategic behaviour in the rental market for quality-differentiated goods. In his classic analysis Ricardo showed that at the competitive equilibrium the price of the marginal unit is driven to zero. An oligopolistic market structure usually leads to a radically different equilibrium. ...

Abstract-This paper applies a recursive model of structure- entry-performance with structural fee... more Abstract-This paper applies a recursive model of structure- entry-performance with structural feedbacks to 62 Korean manufacturing industries for 1976-81. The results strongly support the market power hypothesis. The results also indi- cate that, despite active government intervention, the invisible hand is working: structure is evolving as expected with high profits leading to entry and consequently lower profits. How- ever, there is little support for limit pricing hypotheses in this explosively growing economy. I. Introduction W E test the structure -> conduct -- perfor- AV, Imance, with feedbacks, paradigm using Korean data. There has been little S -- C -- P -- S research for the "Newly Industrialized" Countries (NICs). (Exceptions include Chou (1988) and Lee (1986).)'NICs present different challenges and opportunities for testing. Korea's growth has been explosive. Its manufacturing sec- tor grew at a real rate of 20% over 1966-77, a 900% increase. The gove...

The Canadian Journal of Economics, 1978

SSRN Electronic Journal, 2015

The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between conc... more The Old Empirical Industrial Organization (OEIO) used OLS to analyze the correlation between concentration and industry profits. There are two competing hypotheses--collusion (Bain 1951) or superior competitors (Demsetz 1973). The New Empirical IO (NEIO) undertakes industry specific structural analyses. Like NEIO, we apply a structural model; like OEIO, we address the collusion versus competition question. We first apply our model to 54 Korean industries separately and then pool the data finding support for both the collusive and superior firm hypotheses. Going beyond this we also find the collusive effect dominates.