Sources of Gains in Horizontal Mergers: Evidence from Customer, Supplier, and Rival Firms
52 Pages Posted: 30 May 2003 Last revised: 26 Jun 2015
Date Written: September 12, 2003
We investigate the upstream and downstream product-market effects of a large sample of horizontal mergers and acquisitions from 1980-1997. We construct a dataset that identifies the corporate customers, suppliers, and rivals of the firms initiating horizontal mergers and use this dataset to examine announcement-related stock market revaluations and post-merger changes in operating performance. We find little evidence consistent with increased monopolistic collusion. However, we do find evidence consistent with improved productive efficiency and buying power as sources of gains to horizontal mergers. The nature of the buying power gains, i.e., rents from monopsonistic collusion or improved purchasing efficiency, is also investigated.
Keywords: Mergers, Acquisitions, Collusion, Buying Power
JEL Classification: G34, D43, L41
Suggested Citation: Suggested Citation