Abstract
There are three different types of mergers: horizontal, vertical, and conglomerate. We discuss all three and explain why mergers can be a desirable way to expand a firm. Then we turn to the evidence on the amount of merger activity. Finally, we address one of the important questions surrounding mergers: whether they are motivated by the desire to improve efficiency or by the desire to acquire market power. Although the evidence is sometimes ambiguous, the overwhelming consensus is that most merger activity in the United States is motivated by efficiency considerations.
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This article draws heavily on Carlton and Perloff (2005, ch. 2). The reader interested in more detailed discussion should consult that work together with the references cited therein.
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© 2018 Macmillan Publishers Ltd.
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Carlton, D.W., Perloff, J.M. (2018). Merger Analysis (United States). In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2242
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2242
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Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
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