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Horizontal acquisitions and buying power: A product market analysis

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  • Bhattacharyya, Sugato
  • Nain, Amrita
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    Abstract

    Horizontal mergers exert price pressure on dependent suppliers and adversely affect their performance. Consistent with the theory of countervailing power, concentrated suppliers and those with greater barriers to entry experience larger price declines after consolidation downstream. Time-series results suggest that consolidation in dependent supplier industries follows mergers in main customer industries, indicating that consolidation activity travels up the supply chain. The findings are broadly consistent with pervasive beliefs in the business community about the buying power effects of horizontal mergers.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 99 (2011)
    Issue (Month): 1 (January)
    Pages: 97-115

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    Handle: RePEc:eee:jfinec:v:99:y:2011:i:1:p:97-115

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    Web page: http://www.elsevier.com/locate/inca/505576

    Related research

    Keywords: Takeovers Mergers Buying power;

    References

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    Cited by:
    1. Ahern, Kenneth R., 2012. "Bargaining power and industry dependence in mergers," Journal of Financial Economics, Elsevier, vol. 103(3), pages 530-550.

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