ABSTRACT
Three sets of consequences of mergers interest economists. (1) They can affect the performance of the merging firms – their profits, growth rates, and so on. These effects are of obvious interest to the owners, managers, and employees of the firm, and can help us evaluate the weight to be given to the various hypotheses about the determinants of mergers discussed in the previous chapter. (2) They can affect industry and aggregate concentration levels. (3) They can affect social welfare. This latter effect is, to a considerable extent, a product of the first two consequences of mergers. In this chapter we shall focus on the first set of effects of mergers, since these
are most directly related to the theory of the firm. We begin with the effects of mergers on the profitability of the merging firms.
