Horizontal Mergers in the Paper Industry

Martin Pesendorfer

No 6751, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines mergers and acquisitions in the US paper and paperboard industry. This industry experienced a wave of horizontal mergers during the mid 1980s. We study implications of mergers on consumers, rival firms, and welfare. The analysis is based on a model of investment decisions. We compare the equilibrium investment decisions prior to and after the merger wave. The evidence indicates that the efficiency of the majority of acquiring firms increases following an acquisition. Based on the parameter estimates, we calculate merger welfare effects. We find that total welfare increased by $583.5 million as a result of the mergers.

Date: 1998-10
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Published as Pesendorfer, Martin. "Horizontal Mergers In The Paper Industry," Rand Journal of Economics, 2003, v34(3,Autumn), 495-515.

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Journal Article: Horizontal Mergers in the Paper Industry (2003)
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