Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/269912 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. 2203
Publisher: 
Johannes Kepler University of Linz, Department of Economics, Linz
Abstract: 
This paper investigates the effects of mergers on the product mix of multiproduct firms. Thus, we open the black box of post-merger efficiency improvements to reveal a new margin of adjustment along the product dimension. We analyze horizontal mergers in a theoretical model where oligopolistic firms employ a flexible manufacturing technology and allocate assets between differentiated varieties. After a merger, acquirers drop products from their consolidated domestic product portfolio and reallocate assets towards core varieties. We further demonstrate that such merger-induced efficiency gains imply greater activity in foreign markets. Using detailed Danish register data, we document novel facts regarding mergers and multiproduct firms and find empirical evidence strongly supporting the model's predictions. Our results show that the number of domestic products of the post-merger acquirer falls relative to the sum of the premerger acquirer and target, that skewness of domestic sales rises towards core products, and that export activity increases.
Subjects: 
Multiproduct firms
Horizontal mergers
Flexible manufacturing
Exports
Product mix
Event Study
JEL: 
F12
F14
G34
L22
L25
Document Type: 
Working Paper

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