Are Big Mergers Welfare Enhancing When There Is Environmental Externality?

Luis Gautier () and Mahelet Fikru ()
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Luis Gautier: Universidad de Málaga, Departamento de Teoría e Historia, Econòmica

Chapter Chapter 8 in Handbook of Merger Control and Environmental Policy, 2024, pp 145-173 from Springer

Abstract: Abstract Previous studies find that horizontal merger deals that consolidate a majority of firms in the market are likely to reduce welfare. This chapter provides an in-depth analysis of the relationship between the size of a merger and welfare in industries with environmental externality. In an international framework we show that in a market where more than 50-percent of firms have merged, a further increase in the size of the merger could increase or decrease welfare depending on two previously unexplored factors: (i) a given threshold of size of a merger and (ii) the pollution intensity of firms. Furthermore, we show that the relationship between welfare and size of merger can be affected by an exogenous change in emission tax at home and in a foreign country.

Date: 2024
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Journal Article: Are big mergers welfare enhancing when there is environmental externality? (2020)
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DOI: 10.1007/978-3-031-63549-6_8

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