Exploring the incremental merger value from multimarket and technology arguments

Sebastian Linde and Ralph Siebert

International Journal of Industrial Organization, 2023, vol. 87, issue C

Abstract: We address the question through which channels mergers create incremental value to merging firms and consider various product market and technological arguments. Based on the pairwise stable allocation concept, we estimate firms’ pair-specific (incremental) merger value functions. Our results show that technological arguments contribute to the majority of added merger value. We also find that market power arguments across multiple markets contribute to explaining incremental post-merger value. In contrast, multimarket strategic effects do not add merger value. Our estimated match values are aligned with the merging firms’ post-merger stock market performance.

Keywords: Efficiency gains; Market power; Matching; Merger formation; Merger value; Multimarket competition (search for similar items in EconPapers)
JEL-codes: L10 L12 L13 L20 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:87:y:2023:i:c:s0167718723000073

DOI: 10.1016/j.ijindorg.2023.102925

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