Are big mergers welfare enhancing when there is environmental externality?

Mahelet Fikru () and Luis Gautier

Energy Economics, 2020, vol. 87, issue C

Abstract: Previous studies find that horizontal merger deals that consolidate a majority of firms in the market are likely to reduce welfare. This study 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% 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.

Keywords: Anti-trust agency; Merger and acquisition; Emission tax; Transboundary pollution; Pollution damages; Product differentiation (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Chapter: Are Big Mergers Welfare Enhancing When There Is Environmental Externality? (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:87:y:2020:i:c:s0140988320300578

DOI: 10.1016/j.eneco.2020.104718

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