Working Paper: NBER ID: w22750
Authors: Bruce A. Blonigen; Justin R. Pierce
Abstract: Study of the impact of mergers and acquisitions (M&As) on productivity and market power has been complicated by the difficulty of separating these two effects. We use newly-developed techniques to separately estimate productivity and markups across a wide range of industries using detailed plant-level data. Employing a difference-in-differences framework, we find that M&As are associated with increases in average markups, but find little evidence for effects on plant-level productivity. We also examine whether M&As increase efficiency through reallocation of production to more efficient plants or through reductions in administrative operations, but again find little evidence for these channels, on average. The results are robust to a range of approaches to address the endogeneity of firms’ merger decisions.
Keywords: mergers; acquisitions; market power; efficiency; productivity
JEL Codes: D22; G34; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Mergers and Acquisitions (M&A) (G34) | average markups (D43) |
| Mergers and Acquisitions (M&A) (G34) | plant-level productivity (E23) |
| horizontal Mergers and Acquisitions (G34) | markup effects (E60) |