W HILE economists generally recognize that takeover bids limit managers' opportunity sets, empirical evidence on the efficacy of this constraint has heretofore been lacking. This paper develops a state preference model of a tender offer and the risk adjusted transactions costs of the offer are shown to be the constraining mechanism. We then show that, under certain conditions, observation of rates of return and measures of risk can lead to the estimation of the size of transactions costs. These costs are estimated using a sample of 95 tender offers that occurred in the United States between 1956 and 1970. The objective of each of the offers was a transfer of control of the target firm.

William S. Comanor, Robert H. Smiley; Monopoly and the Distribution of Wealth: Revisited, The Quarterly Journal of Economics, Volume 94, Issue 1, 1 February 198

A model of monopoly and wealth, 178. — Estimation of parameters, 182. — The empirical findings, 189. — Conclusions, 194.

To deter entry into new product markets, firms most often use the creation of product loyalty through advertising and the preemption of markets through numerous and broad patents. Filling all product niches, making the results for highly profitable division, and advertising are used most frequently for existing products. For newly developed products, strategic entry deterrents are used more often when markets are concentrated, populated by large firms, and research intensive. Strategic entry deterrents for existing products are used in concentrated, research intensive markets, but firm size has no effect. Firms develop strategies to deter entry less when other barriers exist.

Robert H. Smiley, S. Abraham Ravid; The Importance of Being First: Learning Price and Strategy*, The Quarterly Journal of Economics, Volume 98, Issue 2, 1