Kerem Cakirer

Areas of Expertise

Industrial Organization, Microeconomics, Game Theory and Strategy, Applied Microeconomics

Academic Degrees

• PhD, University of Texas at Austin, 2007
• MS , University of Texas at Austin, 2003
• BS , Bilkent University, 2001

Professional Experience

• Lecturer, Indiana University, Kelley School of Business Department of Business Economics and Public Policy, Managerial Economics Fall 07, Spring 08, Anti-trust and Regulations Spring 08
• Visiting Lecturer, Texas A&M University, Department of Economics, Intermediate Microeconomics Fall 2006, Spring 2007
• Teaching Assistant, University of Texas at Austin, Department of Economics, Principles of Microeconomics Fall 2001, Principles of Macroeconomics Spring 2002, Intermediate Microeconomics Fall 2002, Spring 2003, Summer 2003, Summer 2004, Spring 2005, Graduate Microeconomic Theory Fall 2003, Spring 2004 Graduate Microeconomic Theory Fall 2003, Spring 2004, Quantative Economics (Graduate) Fall 2004

Selected Publications

• Cakirer, Kerem (2006), “Growth Decision of a Firm in Complementary Markets via Mergers,” ICFAI Journal of Mergers & Acquisitions, Vol. III, No. 3.

Abstract This paper examines the merger decision of a firm in a complementary market setting. There are two downstream firms which produce a base product and two downstream firms which produce side products that support a base product. The downstream firms commits to a compatibility contract with a complementary upstream firm. After the compatibility contracts are determined, the upstream firms must decide on a firm specific R&D investment to supply a variety of side products for their complementary downstream firms. I map each different market schemes, which are characterized by the upstream firms'' production efficiencies, to a merger type. I identify the conditions under which firms undergo vertical integration or a horizontal merger. Although an integrated firm invests less for its downstream competitor, the independent downstream firm might agree to a compatibility contract with the integrated firm in order to reduce the downstream competition effect when the integrated firm is efficient enough. As a result, the integrated firm acquires the business of its downstream competitor and underinvestment occurs in the market. The analysis shows that the likelihood of vertical integration increases as upstream firms'' efficiency gap increases. However, the likelihood of vertical integration may or may not increase with the degree of downstream competition in the market. Unlike the predictions of two-firm models, vertical integration can be unprofitable because of the enclosure costs. This result can explain why any firm would not initiate a merger or an acquisition in a complementary market setting.