Working Paper: NBER ID: w31229
Authors: Enghin Atalay; Alan T. Sorensen; Christopher J. Sullivan; Wanjia Zhu
Abstract: We examine merging firms' additions and removals of products for a sample of 66 mergers across a wide variety of consumer packaged goods markets. We find that mergers lead to a net reduction in the number of products offered by merging firms. Merging firms tend to both drop and add products at the periphery of their joint product portfolios, with the net effect of increasing within-firm product similarity. These results are consistent with theories of the firm that emphasize cost synergies among similar types of products or managerial core competencies linked to particular segments of the product market.
Keywords: mergers; product repositioning; consumer welfare; antitrust policy
JEL Codes: L00; L10; L13; L21; L22; L23; L25; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| mergers (G34) | net reduction in the number of products offered by merging firms (L19) |
| mergers (G34) | negative changes in products sold by target firm (L21) |
| mergers (G34) | negative changes in products sold by acquiring firm (G34) |
| mergers (G34) | increased product similarity within the merged firm (L15) |
| mergers (G34) | decline in within-firm product dissimilarity (L15) |
| mergers (G34) | changes in product variety (L15) |