An Evaluation of Mergers in Six Industries

ECONOMISTS have long attacked horizontal merger for its role in increasing concentration and defended it as a relatively painless means of attaining economies of scale and/ or inter-regional entry. This paper attempts to evaluate these divergent views using the experience of six large industries. In part I, the data and definitions used are explained. In part II, an attempt is made to measure the role of merger and of various other factors in concentration change. Part III examines the proportion of acquired capacity that is sub-optimal in scale, and part IV, the proportion that is inter-regional. Part V contains some brief conclusions.