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Browsing CPBS - Working Papers / Preprints by Author "Brito, Duarte"
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- Modeling horizontal shareholding with ownership dispersionPublication . Brito, Duarte; Elhauge, Einer; Ribeiro, Ricardo; Vasconcelos, HelderThe dominantformulationformodelingtheobjectivefunctionofmanagersofcompeting rms withhorizontalshareholdinghasbeencritiquedforproducingtheresultthat,ifnon-horizontal shareholdersarehighlydispersed,managerswouldmimictheinterestsofhorizontalsharehold- ers eveniftheyownashareofthe rmthatdoesnotinducefullcontrol.Weshowthatthis issuecanbeavoided(whilemaintainingtheremainingfeaturesofthedominantapproach) withanalternativeformulationthatisderivedfromaprobabilisticvotingmodelthatassumes shareholderswithhigher nancialstakeswilltakegreaterinterestinthemanagerialactions, whichyieldstheresultthatmanagersmaximizeacontrol-weightedsumoftheshareholders relativereturns.
- Quantifying the Coordinated Effects of Partial Horizontal AcquisitionsPublication . Brito, Duarte; Ribeiro, Ricardo; Vasconcelos, HelderRecent years have witnessed an increased interest, by competition agencies, in assessing the com- petitive e§ects of partial acquisitions. We propose an empirical structural methodology to quantify the coordinated e§ects of such acquisitions on di§erentiated products industries, by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained. The methodology can deal with settings involving all type of owners and ownership rights: owners that can be internal to the industry (rival Örms) and external to the industry; and ownership rights that can involve Önancial interests and corporate control, can be direct and indirect, can be partial or full. We provide an empirical application of our proposed methodology to several acquisitions in the wet shaving industry that give rise to cross- and common-ownership structures. The results seem to suggest that the incentives of (i) the acquiring partyís Örm to coordinate are non-decreasing after an acquisition (independently of whether it involves full or partial Önancial or corporate control rights, by internal or external owners), (ii) the acquired Örm to coordinate are non-decreasing after acquisitions involving full or partial corporate control rights, but non-increasing after acquisitions involving full or partial Önancial rights, and (iii) the remaining Örms in the industry to coordinate are non-increasing after an acquisition (again, independently of whether it involves full or partial Önancial or corporate control rights, by internal or external owners).
- Unilateral Effects Screens for Partial Horizontal Acquisitions: The Generalized HHI and GUPPIPublication . Brito, Duarte; Osório, António; Ribeiro, Ricardo; Vasconcelos, HélderRecent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions. We propose a generalization to a partial horizontal acquisition setting of the two most traditional indicators used to screen unilateral anti-competitive effects: the HeIndahl- Hirschman Index and the Gross Upward Price Pressure Index. The proposed generalized indicators can deal with all types of acquisitions that may lessen competition in the industry: acquisitions by owners that are internal to the industry (rival rms) and engage in cross-ownership, as well as acquisitions by owners that are external to the industry and engage in common-ownership. Furthermore, these indicators can deal with direct and indirect acquisitions, which may or may not correspond to control, and nest full mergers as a special case. We provide an empirical application to several acquisitions in the wet shaving industry. The results seem to suggest that (i) a full merger induces higher unilateral anti-competitive e¤ects than a partial controlling acquisition involving the same rms, (ii) a partial controlling acquisition induces higher unilateral anti-competitive e¤ects than a partial non-controlling acquisition involving the same and the same financial stakes, and (iii) an acquisition by owners that are internal to the industry induces higher unilateral anti-competitive effects than an acquisition (involving the same and the same stakes) by external owners that participate in more than one competitor.