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Competition, Takeovers & Investment

Aims & objectives

The essential purpose of this project was to investigate whether with de-regulation, privatisation, and growing international trade the intensity of competition both in the UK's product markets and the capital market has increased. How does greater competition effect economic efficiency?

Methods

There were two kinds of methods employed in this investigation. First, time series of data on the UK corporate performance (specifically rate of profit, profit margins and productivity of capital) were analysed to examine the degree of persistency displayed by these variables. Secondly, the changes in the nature of selection mechanism and other issues of interest in relation to the market for co-operate control were investigated by comparing the multi-variate characteristics of various population of firms: the acquired, the acquiring, the non-acquired, the non-acquiring.

Results & dissemination

The main work on the project consisted of:

  1. further work on the data set and statistical methodology
  2. devising a more general and inclusive theoretical framework for considering the empirical results of the questions investigated in the project
  3. collaboration with Professor Alice Amsden at MIT and Professor Burcin Yortoglu at the University of Vienna

The main economic question being investigated was (i) whether the US economy displays greater intensity of competition than the UK in diverse dimensions; and (ii) if so, does it matter? The underlying theoretical premise is the concept of an optimal degree of competition which best advances investment, technological progress and economic growth. For this purpose, various indicators of product market as well as capital market competitions were systematically compared between the two countries and over time. In this form, this project also linked up with the research project on Corporate Governance & Investment with which the two researchers were involved.

Apart from the continuing work on these issues for the US and UK economies, and for emerging markets, the project has been investigating issues of multi-lateral competition policy in the era of globalisation. These are outlined in papers by Singh and Singh and Dhumale. Singh's work also presents a critique of the 2003 EU proposals for a multilateral agreement on competition and concludes that these proposals are not suitable either from the perspective of emerging countries or from that of the world economy as a whole. An alternative multilateral policy framework which may better meet the needs of emerging as well as mature countries is outlined in this work.

Working papers

Glen, J. and Singh, A. (2003) 'Capital structure, rates of return and financing corporate growth: comparing developed and emerging markets', ESRC Centre for Business Research Working Paper No. 265

Singh, A. and Zammitt, A. (2003) 'Globalisation, labour standards and economic development', ESRC Centre for Business Research Working Paper No. 257

Singh A. (2002) 'Competition, corporate governance and selection in emerging markets', ESRC Centre for Business Research Working Paper No. 247

Singh, A (2001) Income inequality in advanced economies: a critical examination of the trade and technology theories and an alternative perspective. ESRC Centre for Business Research Working Paper No. 219

Singh, A., Singh, A. and Weisse, B. (2000) 'Information technology, venture capital and the stock market', Department of Applied Economics, Cambridge. Discussion Papers in Accounting and Finance, No. AF47.

Cosh, A., Hughes, A., Lee, K. and Singh, A. (1996) 'Takeovers, institutional investment and the persistence of profits', ESRC Centre for Business Research Working Paper No. 30

Books

Howes, C. and Singh, A. (eds.) (2000) Competitiveness Matters: Industry and Economic Performance in the US, University of Michigan Press, Ann Arbor.

Journal articles

UNCTAD, Issues in Competition Law and Policy, United Nations, NY and Geneva (UNCTAD/DITC/CLP/2003/10)

Singh, A. (2003) 'Competition, corporate governance and selection in capital markets', Economic Journal, vol 113: pp F443-F464. 

Glen, J., Lee, K. and Singh, A. (2003) 'Corporate profitability and the dynamics of competition in emerging markets: a time series analysis', Economic Journal, vol 113: pp F465-F484. 

Glen, J., Lee, K. and Singh, A. (2001) 'Persistence of profitability and competition in emerging markets', Economics Letters, 72: 247-253.

Glen, J., Lee, K., Singh, A. (2001) 'Intensity of competition in emerging markets and in advanced economies - evidence from the persistence of corporate rates of return in emerging markets', in Proceedings of the 3rd Workshop on Corporate Governance in Europe, Viertjahrsheft Heft 2, 70 Jahrgang, pp 201-203

Book chapters

Singh, A. and Dhumale, R. (2004) 'Competition, policy, development and developing countries', in Arestis, P., Baddeley, M., and McCombie, J. (eds.), What global economic crisis?, Palgrave McMillan, pp 122-145.

Singh, Ajit, Singh, Alaka, and Weisse, Bruce. (2003) 'Corporate governance, competition, the new international financial architecture and large corporations in emerging markets', in UNCTAD (ed.), Management of Capital Flows: comparative experiences and implications for Africa, Geneva, pp 1-70. 

Glen, J., and Singh, A. (2003) 'Capital structure, rates of return and financing corporate growth: comparing developed and emerging markets', in Robert E. Litan, Michael Pomerleano, V. Sundararajan (eds), Future of Domestic Capital Markets,  Brookings Press, Washingtong DC, pp 373-416. 

Singh, A., and B. Weisse, (2001) "Deindustrialisation", in Jonathan Michie (ed) Reader's Guide to the Social Sciences, Vol 2, London, Fitzroy Dearborn 

Singh, A., and B. Weisse, (2001) "Mergers and acquisitions", in Jonathan Michie (ed) Reader's Guide to the Social Sciences, Vol 2, London, Fitzroy Dearborn 

Singh, A. 'The Anglo-Saxon market for corporate control, the financial system and international competitiveness', in Howes, C. and Singh, A. (eds.) (2000), Competitiveness Matters: Industry and Economic Performance in the US, University of Michigan Press, Ann Arbor. 

Howes, C. and Singh, A. (2000), 'Competitiveness matters: An introduction' in Howes, C. and Singh, A. (eds.) (2000), Competitiveness Matters: Industry and Economic Performance in the US, University of Michigan Press, Ann Arbor.

Project leaders

Ajit Singh
Kevin Lee