Mergers Can Boost Profits But Hurt Consumers, Study Finds
The article explores the impact of mergers on market efficiency and welfare. It shows that mergers among similar firms are usually not profitable, except in cases of monopolization. By studying different cost structures, the researchers found conditions where a merger can increase welfare. They also compared two types of mergers - rationalization and synergy - and found that rationalization mergers are more likely to benefit society, while synergy mergers are more likely to be profitable.