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Non-competition covenants in acquisition deals

Azevedo, Alcino; Pereira, Paulo J.; Rodrigues, Artur


Alcino Azevedo

Paulo J. Pereira

Artur Rodrigues


© 2016 Elsevier B.V. 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.


Azevedo, A., Pereira, P. J., & Rodrigues, A. (2016). Non-competition covenants in acquisition deals. Economics letters, 143, 61-65.

Journal Article Type Article
Acceptance Date Mar 30, 2016
Online Publication Date Apr 2, 2016
Publication Date Jun 1, 2016
Deposit Date Apr 15, 2016
Publicly Available Date Apr 15, 2016
Journal Economics letters
Print ISSN 0165-1765
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 143
Pages 61-65
Keywords Non-competition covenants, Acquisitions, Real options
Public URL
Publisher URL
Additional Information This article is maintained by: Elsevier; Article Title: Non-competition covenants in acquisition deals; Journal Title: Economics Letters; CrossRef DOI link to publisher maintained version:; Content Type: article; Copyright: © 2016 Elsevier B.V. All rights reserved.


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