Horizontal Mergers in the Paper Industry
I examine mergers and acquisitions in the U.S. paper and paperboard industry, which experienced a wave of horizontal mergers during the mid-1980s. I describe how the mergers affected investment decisions, costs, and consumers, finding that merged firms lose market share and are more likely to scrap capacity subsequent to an acquisition. I estimate a cost function for individual firms based on an investment model, finding that the efficiency of the majority of acquiring firms increases following an acquisition. Using the estimated cost function, I quantify welfare effects and find evidence of total welfare increases in some paper product categories as a result of the mergers. Copyright 2003 by the RAND Corporation.
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Volume (Year): 34 (2003)
Issue (Month): 3 (Autumn)
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"Horizontal Mergers: An Equilibrium Analysis,"
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- Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
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