Exploring the incremental merger value from multimarket and technology arguments

We address the question through which channels mergers create incremental value to merging firms and consider various product market and technological arguments. Based on the pairwise stable allocation concept, we estimate firms’ pair-specific (incremental) merger value functions. Our results show that technological arguments contribute to the majority of added merger value. We also find that market power arguments across multiple markets contribute to explaining incremental post-merger value. In contrast, multimarket strategic effects do not add merger value. Our estimated match values are aligned with the merging firms’ post-merger stock market performance.