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- Title
Market power and systematic risk.
- Authors
Hollstein, Fabian; Prokopczuk, Marcel; Würsig, Christoph Matthias
- Abstract
We examine the impact of product market competition on firms' systematic risk. Using a measure of total product market similarity, we document a strong negative relationship between market power and market betas. The effect more than triples in the most recent period of low competition. Anticompetitive mergers result in a significant reduction in market betas. Firms facing less competition seem to be partially insulated from systematic discount‐rate shocks. Lower equity costs therefore imply that market power is partly self‐perpetuating.
- Subjects
ELECTRICITY markets; ECONOMIC competition; MARKET power; CAPITAL costs; MERGERS &; acquisitions; RELATIONSHIP marketing
- Publication
Financial Management (Wiley-Blackwell), 2024, Vol 53, Issue 2, p233
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/fima.12438