Upward Pricing Pressure Formulations with Logit Demand and Endogenous Partial Acquisitions

Fotis, Panagiotis and Polemis, Michael and Eleftheriou, Konstantinos (2015): Upward Pricing Pressure Formulations with Logit Demand and Endogenous Partial Acquisitions.

Abstract

The aim of this paper is to derive the formula of Gross Upward Pricing Pressure Index (GUPPI), used on duopoly markets with differentiated products, when we allow for unilateral equity stakes (expressed as a function of victim's market share) to be endogenously determined. The results show that the unilateral effects of partial acquisitions, as they are measured by GUPPI when the percentage of equity stakes of the acquirer in the target firm is considered endogenous, may be higher than in the case where the said percentage is exogenously determined.

• Item Type: MPRA Paper
• Language: English
• Keywords: Differentiated Product Markets; GUPPI; Logit Demand; Endogenous Partial Acquisitions
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L16 - Industrial Organization and Macroeconomics: Industrial Structure and Structural Change ; Industrial Price Indices

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