What is it about?

What are socially responsible mergers? Do companies sometimes merge and ignore consumers' interests. Yes, and it is most likely when merger gains are not fairly distributed between the merging firms and their customer firms. While mergers generate gains in general, in many cases, customers are not given the fair share of surplus they are entitled to.

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Why is it important?

Seldom, attention is paid to consumer surplus when people talk about corporate social responsibility (CSR). But enhancing consumer surplus is a basic and essential part of a company’s social responsibility. In this paper (co-authored with Ni Peng and Yi Zhang), we find merger gains are not fairly distributed to customers at the competitive price. Rather, our evidence show that merging firms use their market power to retain gains, leaving customers short of the surplus they could and should have enjoyed under perfect competition. We draw people’s attention to the presence of distributive inefficiency in horizontal mergers.


Socially responsible mergers should allow consumers to enjoy their entitled interests. And merger gains should be passed proportionally to the downstream to reach consumers.

Dr Ning Gao
University of Manchester

Read the Original

This page is a summary of: Distributive inefficiency in horizontal mergers: Evidence from wealth transfers between merging firms and their customers, International Review of Financial Analysis, November 2021, Elsevier, DOI: 10.1016/j.irfa.2021.101941.
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