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Effects of mergers and acquisitions on food quality

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  • Blundell, Wesley
  • Devadoss, Stephen
  • Luckstead, Jeff

Abstract

We examine the impact of mergers on product quality in the U.S. agri-food industry. Our difference-in-differences analyses provide evidence that following a one standard deviation increase in merger activity there is a 48.1% decrease in pounds of food recalled and an 18.7% decrease in the total number of recalls. A significant implication of our analysis is that increased concentration increases product quality.

Suggested Citation

  • Blundell, Wesley & Devadoss, Stephen & Luckstead, Jeff, 2024. "Effects of mergers and acquisitions on food quality," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004646
    DOI: 10.1016/j.econlet.2024.111980
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    References listed on IDEAS

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    1. D. Daniel Sokol & Vivek Ghosal & D. Daniel Sokol, 2013. "Compliance, Detection, and Mergers and Acquisitions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 34(7-8), pages 514-528, October.
    2. Chen, Yongmin & Gayle, Philip G., 2019. "Mergers and product quality: Evidence from the airline industry," International Journal of Industrial Organization, Elsevier, vol. 62(C), pages 96-135.
    3. Cl'ement de Chaisemartin & Xavier D'Haultf{oe}uille, 2020. "Difference-in-Differences Estimators of Intertemporal Treatment Effects," Papers 2007.04267, arXiv.org, revised Dec 2024.
    4. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.
    5. Marc F. Bellemare & Casey J. Wichman, 2020. "Elasticities and the Inverse Hyperbolic Sine Transformation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(1), pages 50-61, February.
    6. Gil, Ricard & Kim, Myongjin, 2021. "Does competition increase quality? Evidence from the US airline industry," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    7. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    8. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2017. "Horizontal mergers and product quality," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(4), pages 1063-1103, November.
    9. Ho, Vivian & Hamilton, Barton H., 2000. "Hospital mergers and acquisitions: does market consolidation harm patients?," Journal of Health Economics, Elsevier, vol. 19(5), pages 767-791, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Agri-food; Product recalls; Mergers; Product quality;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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