Building new plants or entering by acquisition? firm heterogeneity and entry barriers in the u.S. Cement industry

• Autores: Hector Perez-Saiz
• Localización: The Rand Journal of Economics, ISSN-e 1756-2171, Vol. 46, Nº. 3, 2015, págs. 625-649
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • I estimate a model of entry for the cement industry that considers two options of expansion: building a plant or acquiring an incumbent. The model takes into account that there is a transfer of the buyer firm-level characteristics to the acquired plants, which affects profits from the acquisition. Estimates show that a less-permissive Reagan–Bush administration's merger policy would decrease the number of acquired plants by 71%, greenfield entry would increase by 9.2% and consumer surplus would decrease by 23.5%. Results suggest that regulators should be concerned about policies that negatively affect the efficient reallocation of assets between incumbents and entrants