| Number |
CREPEDP-89 |
| Publication Date |
December 2020 |
| Title |
Compatible Mergers: Assets, Service Areas, and Market Power
|
| Author |
Tetsuji Okazaki, Ken Onishi, and Naoki Wakamori
|
| Abstract |
We empirically examine the discrepancy between the incentive of firms to merge and the social value of mergers using data on merger waves in the pre-WWII Japanese electricity industry when a competition authority did not yet exist. We find that firms could enjoy cost synergies when merging with firms with greater differences in production asset composition and/or reachable customers. Such "compatible" mergers resulted in increases in capital utilization and output. However, these synergies did not affect the merger decision; instead, geographical proximity increased the likelihood of mergers. These results imply that the merger incentive may not align with social welfare.
|
| Keywords |
Mergers and Acquisitions, Merger Policy, Merger Waves.
|
| Other information |
Paper in English (43 pages) |