Do Mergers and Acquisitions Increase Market Concentration?

Victor E.

Order the writing of a tailor-made Economy general Thesis

Free quote online

Dissertation Format .docx

Do Mergers and Acquisitions Increase Market Concentration?

Download

Read an extract

Themes

M&A Mergers and acquisitions, merger, SCP Structure-Conduct-Performance paradigm, market, market concentration, strategy, consumer welfare, competition, market domination, business, telecommunications, airline industry, pharmaceutical industry, banking industry

Reader
Abstract
Contents
Extract

Abstract

Mergers and acquisitions (M&A) have been regarded as critical events in the sphere of industrial economics that affect market concentration and simultaneously attract the attention of researchers trying to figure out their impact. Such mergers and acquisitions of two or more organizations that characterize the process can modify the competition structure within industries, thus triggering concern about monopoly, pricing power, and consumer well-being. The purpose of the paper is multifaceted. It aims to provide a generalized review of the intertwining of M&A dealings and market concentration, incorporating theoretical perspectives, empirical research findings, and relevant case studies.

Introduction
Theoretical Frameworks
1. Market Structure Theories
2. Literature Review Addressing Game Theory
3. Resource-Based View (RBV)
4. Transaction Cost Economics
Overview of Theoretical Frameworks
Empirical Evidence
1. Research by Granja and Paixao (2021) on Banking Industry Mergers
2. The Study by Büssgen and Stargardt (2024) on M&A in the Pharmaceutical Industry
3. Analysis of the Telecommunications Sector by Rajpurohit (2021)
Case Study: The Airline Industry
Conclusion

Get this table of contents for free after login.

Extract

[...] Integrating such frameworks into research and policymaking will enable researchers and policymakers to have a deeper understanding of the driving forces of M&A deals and their implications for market competition and consumer welfare. Empirical Evidence Findings of the research done by Granja and Paixao (2021) in the banking sector have shown that the main effect of the waves of M&A transactions is the increased concentration of the market. Big banks are likely to buy out the smaller banks or merge with them in the market. This will eventually lead to the larger banks having a higher share of the market. [...]

[...] If transaction costs are reduced, takeovers and mergers can enhance resource reallocation and capital, which could lead to a new structure and concentration of the market. In short, the male economists' theories of market structure, game theory, resource-based view, and transaction cost economics enrich our knowledge of the intricate relationship between mergers and acquisitions as a reason for a rise in industry concentration. The acknowledgment of the moments that make companies take over each other and the outcomes of these transactions in the market conditions would help the regulators and policymakers to judge the competitive result of those transactions correctly and to develop the measures that are in the interest of customers and the effectiveness of the market. [...]

[...] The game theory literature that is relevant to M&A provides valuable information about the strategic choices and competitive influences of mergers and acquisitions, which together contribute to a better comprehension of the market concentration process. Resource-Based View (RBV) The Resource-based approach (RBV) pays maximum attention to the company's resources and capabilities, which are crucial in determining the strategy and outcome of the M&A. This school of thought depicts firms engaging in mergers and acquisitions to acquire strategic assets and enter new markets. [...]

[...] Besides, empirical evidence also has an essential role in evaluating the impact of mergers and acquisitions on market domination. By implementing data analysis tools that can be updated continuously and predicting the trends among different sectors that have been the consequences of mergers and acquisitions, researchers try to discover the patterns and trends of the sectoral performances. This is a vital point as we can get an idea of the overall effects of the market concentration rise, i.e., competition, innovation, and consumer welfare. [...]

[...] Does changing contexts affect linkages throughout the mergers and acquisition process? A multiphasic investigation of motives, pre-and post-acquisition, and performance. Strategic Change, 29(2), 149-164. https://onlinelibrary.wiley.com/doi/abs/10.1002/jsc.2318 Stefko, R., Heckova, J., Gavurova, B., Valentiny, T., Chapcakova, A., & Ratnayake Kascakova, D. (2022). An analysis of the impact of the economic context of selected determinants of cross-border mergers and acquisitions in the EU. Economic research-Ekonomska istra?ivanja, 35(1), 6385-6402. https://hrcak.srce.hr/file/436877 Appendix Industry Surveys M&A industry analysis, which is the survey of mergers and acquisitions interventions on the constituents of the industry structure, holds a decisive position in the industry's structure. [...]

docx