Merger externalities in oligopolistic markets

•We evaluate the externalities of 183 large mergers on rivals.•We use synthetic control groups to create counterfactuals.•We find a significant positive externality on rival profits.•The effect strongly varies with market features and competition. We evaluate the external effects of 183 large merger...

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Bibliographic Details
Published in:	International journal of industrial organization Vol. 47; pp. 230 - 254
Main Authors:	Gugler, Klaus, Szücs, Florian
Format:	Journal Article
Language:	English
Published:	Amsterdam Elsevier B.V 01-07-2016 Elsevier Sequoia S.A
Subjects:	Acquisitions & mergers Competition External effects Impact analysis Mergers Return on assets Rivals Spillovers Studies Synthetic controls Synthetic controls Spillovers Mergers Rivals
Online Access:	Get full text
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Summary:	•We evaluate the externalities of 183 large mergers on rivals.•We use synthetic control groups to create counterfactuals.•We find a significant positive externality on rival profits.•The effect strongly varies with market features and competition. We evaluate the external effects of 183 large mergers at the market level by assessing the impact on the main competitors of the merging firms. Using synthetic control groups and difference in difference estimation, we find that the return on assets of rival firms increases significantly after a merger. The size of the effect varies strongly with market characteristics and the intensity of competition.
ISSN:	0167-7187 1873-7986
DOI:	10.1016/j.ijindorg.2016.05.003