Evidence for the Effects of Mergers on Market Power and Efficiency

When a corporation announces a prospective merger, markets react: Target company shares soar, and acquiring company leaders reap plaudits for boldness and vision, while board members vote themselves and executives huge bonuses for negotiating the deal. Clearly money changes hands, but what effects do mergers and acquisitions have on the economy in general? This thought-provoking study by economists Bruce A. Blonigen and Justin R. Pierce looks into whether M&A increases productivity or simply raises prices. getAbstract recommends this technical analysis of productivity and price at US manufacturing plants to economists and executives.