Merger Research: What’s new in 2013 ?

It is that time of the year when newspapers and magazines are full of ‘book of the year’ recommendations.

Well, by way of contrast……

….here is my selection of ten of the most interesting new (freely-downloadable) research papers I have read in 2013.

A great antidote to an overdose of turkey and tinsel !

The selection covers both theory and practice and ranges from hospital mergers….to topical issues in merger policy…. to what makes for successful mergers.

Do drop me a line if you think there are other papers as deserving of a read as those on the list.

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So, here are my ten (in no particular order)……

1. Quality matters

Most studies of the effects of past mergers focus on price. Here is that rare beast – one that looks at how two past mergers affected quality.

‘Mergers and Product Quality: Evidence from the Airline Industry, Chen and Gayle, MPRA, November 2013

http://mpra.ub.uni-muenchen.de/51238/1/MPRA_paper_51238.pdf

2. Going forward

Here is another paper looking at an often overlooked issue: how the prevalence of forward contracting in a sector affects the impact that horizontal mergers may have. Maybe one to consider when that next electricity merger comes along?

‘Forward Contracting and the Welfare Effects of Horizontal Mergers’, Miller, EAG, May 2013

http://www.justice.gov/atr/public/eag/296846.pdf

3. Could hospital mergers be good for you?

Hospital and health mergers are very much in the news these days. Here’s a paper that shows how price, quality, coinsurance and regulation can interact to produce some surprising results.

‘Hospital Mergers: A Spatial Competition Approach’, Brekke, Siciliani and Straume, NHH, April 2013

http://www.nhh.no/Files/Filer/institutter/sam/Discussion%20papers/2013/08.pdf

4. Bad news for R&D?

This paper uses a differences-in-differences approach to look at the effect of over 200 mergers on R&D.

On the face of it, it looks like bad news for R&D. But is it actually harm to consumers?

‘M&A and R&D – Asymmetric Effects on Acquirers and Targets’, Szücs, DIW Berlin, October 2013

http://www.diw.de/documents/publikationen/73/diw_01.c.429740.de/dp1331.pdf

5. Judging books by titles

Don’t let the title put you off. This is one of the most important papers of 2013. Its results should give merging companies and competition authorities a lot of food for thought.

‘Merger Externalities in Oligopolistic Markets’, Gugler and Szücs, DIW Berlin, June 2013

http://www.diw.de/documents/publikationen/73/diw_01.c.426970.de/dp1321.pdf

6. Timing is everything

I can think of several UK cases where the fact that the deal has been investigated after completion has helped clarify aspects of the case!

This paper puts the issue into a wider policy context and highlights the main factors that should influence timing. But is it really a case of either/or?

‘Ex post or ex ante? On the optimal timing of merger control’, Cosnita-Langlais and Tropeano, Economix Working Papers, June 2013

http://economix.fr/pdf/dt/2013/WP_EcoX_2013-22.pdf

7. Are cartels and mergers substitutes?

The short answer is ‘yes’, according to this paper. Clues perhaps for the Merger Intelligence function in a voluntary regime?

‘Do Cartel Breakdowns Induce Mergers?’, Hüschelrath and Smuda, ZEW, June 2013

http://econstor.eu/bitstream/10419/74799/1/749474947.pdf

8. A new demand-side efficiency

Some interesting new arguments in this paper, of particular interest where search costs are high.

‘Search Costs, Demand-side Economies and the Incentives to Merger under Bertrand Competition’, Moraga-Gonzalez and Petrikait, February 2013

http://www.tinbergen.nl/~moraga/Moraga_Petrikaite_3.pdf

9. Culture clashes

Clash of cultures often gets blamed for mergers that don’t deliver. But how strong is the theory and evidence supporting this view?

This paper contains some interesting insights into one of the most important questions about M&A.

‘The Role of Corporate Culture in Mergers and Acquisitions’, Bouwman, May 2013

http://faculty.weatherhead.case.edu/bouwman/downloads/BouwmanCorpCultureM&A%20Dec2012.pdf

10.Mergers that matter

An interesting approach to measuring what affects propensities to merge and who benefits from merger.

Mergers that matter: The Value Impact of Economic Links’, Harford et al, July 2013

https://www.nhh.no/Files/Filer/institutter/fin/wp/Paper%20-%20Jarrod%20Harford.pdf

Happy reading…and Merry Christmas one and all