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Mergers and Rivals' Mark-ups: Evidence from European Paper Manufacturers



This paper investigates the effect of merger-driven market concentration on the mark-ups of non-merging rival firms in Europe's paper manufacturing industry. Using a representative data set of 400 independently-owned companies spanning a ten-year period, we aim to disentangle the impact of full-scale mergers and acquisitions from that due to other concentration-increasing developments. We find a positive and statistically significant relationship between price-cost margins and overall industry consolidation, as captured by the Herfindahl-Hirschman and four-firm indexes. However, takeover-related market share amalgamation has a negative impact, albeit of more modest proportions. The latter result seems to be driven by vertical transactions, suggesting that input-side channels, much as product price competition, may explain non-merging firms' mark-up response.

Suggested Citation

  • Rosen Marinov, 2007. "Mergers and Rivals' Mark-ups: Evidence from European Paper Manufacturers," IHEID Working Papers 21-2007, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heiwp21-2007

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    Mergers and acquisitions; Concentration; Mark-up; Competition policy;

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