Please use this identifier to cite or link to this item: https://hdl.handle.net/1822/43953

TitleNon-competition covenants in acquisition deals
Author(s)Azevedo, Alcino
Pereira, Paulo J.
Rodrigues, Artur
KeywordsNon-competition covenants;
Acquisitions;
Real options
Issue dateJun-2016
PublisherElsevier
JournalEconomics Letters
Abstract(s)We study the changes in the consumers’ and producers’ surplus associated with acquisition deals where there is a non-competition covenant that forbids the seller from re-entering the market over a given time period. We find that these acquisition deals can lead to significant negative (positive) changes in the producers’ (consumers’) surplus, which decrease significantly with the time period of the covenant. We also show that the effect of the time period of the covenant on the welfare change can be positive or negative. It depends largely on the market conditions, such as the profit uncertainty and growth rate.
TypeArticle
DescriptionJEL classification: G34; D81
URIhttps://hdl.handle.net/1822/43953
DOI10.1016/j.econlet.2016.03.025
ISSN0165-1765
Publisher versionhttp://www.sciencedirect.com
Peer-Reviewedyes
AccessRestricted access (UMinho)
Appears in Collections:NIPE - Artigos em Revistas de Circulação Internacional com Arbitragem Científica

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