Barratt–Redrow Merger: 6 Ways A-Level Students Can Use It as Economics Application

The Redrow housing company was acquired by Barratt Developments in a deal that was completed in August 2024. The merger, valued at £2.5 billion, created a mega house-builder, Barratt Redrow, with a combined turnover of £7.45 billion and a capacity to build over 22,000 homes annually.

🏗️ Barratt–Redrow Merger – 6 Ways A-Level Students Can Use It as Application

1. Market Structure – Higher Concentration

With over 22,000 homes annually and £7.45bn turnover, the merger significantly increases market concentration — a strong example of consolidation in an oligopolistic market.

2. Economies of Scale

The merged firm could achieve internal economies of scale, such as lower average costs from bulk buying of materials, shared design/planning departments, and more efficient use of land. This links directly to productive efficiency.

3. Market Power, Monopsony & Consumer Surplus

If the new firm gains pricing power, it could reduce consumer surplus by raising house prices in less competitive regions. It may also act as a monopsonist, using its buying power to squeeze smaller building industry suppliers, lowering their revenue or margins.

4. Shareholder Risk – Integration Failure

Large mergers carry risks: integration costs, cultural clashes, and diseconomies of scale could reduce shareholder value if expected synergies fail to materialise.

5. Dynamic Efficiency & Innovation

Combining R&D, data systems, and digital design tools could lead to dynamic efficiency, improving long-term productivity and the speed of housebuilding.

6. Housing Market Failure

The UK housing market suffers from persistent undersupply. A larger firm with more capacity could help correct this market failure, especially if it targets affordable housing.