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Do mergers and takeovers raise prices rather than efficiency?

Geoff Riley

30th October 2016

Super article to read on the impact of takeovers and mergers on economic efficiency and consumer welfare.

Drawing on research on the US economy, a report finds that corporate integration accelerates the process towards oligopolistic markets which can lead to higher prices in the long run.

"Bruce Blonigen and Justin Pierce of the Federal Reserve Board have some evidence. In a new paper titled “Evidence for the Effects of Mergers on Market Power and Efficiency,” they look at how mergers in manufacturing affect corporate performance. What they discovered is that mergers usually tend to increase market power -- in other words, they allow companies to increase profits by hiking prices. But they don’t find much evidence for improved efficiency."

Read the article here by clicking this link

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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