Merger: Is It an Incentive to Use Market Power or Efficiency Gains? Analysis of Effects of Three Horizontal Mergers in Highly-concentrated Industries
Abstract
The article is devoted to the assessment of the impact of three large-scale horizontal mergers — in the production of aluminum, in the production of cement and in the production of grain-oriented steel, — on the prices, which are quoted by the companies for the buyers. All mergers resulted in market structure close to monopoly in domestic market. Using difference-in-difference estimation of price increase it was shown that in six out of nine products analyzed mergers influenced prices significantly. But only in two out of six cases statistical significant price increase is reported. We consider these results as an evidence, though indirect, that despite the serious competition concerns the most important effects of mergers are efficiency gains in contrast to monopolistic price increase.
Keywords:
horizontal mergers, price effects, difference-in-difference method
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Articles of the Russian Management Journal are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.