Should competition authorities care about conglomerate mergers?
Mergers and acquisitions may change competition even when they do not affect market structure, a case known as con glomerate mergers. In this paper, we explore a wave of acqui sitions of higher education institutions by educational groups in Brazil, which allows us to disentangle the effects of con...
| Authors: | ; |
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| Format: | Article |
| Status: | Published version |
| Publication date: | 2019 |
| Country: | Brasil |
| Institution: | INSPER |
| Repository: | Repositório Institucional da INSPER |
| Language: | English |
| OAI Identifier: | oai:repositorio.insper.edu.br:11224/4082 |
| Online Access: | https://repositorio.insper.edu.br/handle/11224/4082 https://doi.org/10.1016/j.ijindorg.2019.06.001 |
| Access Level: | Open access |
| Keyword: | Mergers and acquisitions conglomerate mergers multiunit firms higher education |
| Summary: | Mergers and acquisitions may change competition even when they do not affect market structure, a case known as con glomerate mergers. In this paper, we explore a wave of acqui sitions of higher education institutions by educational groups in Brazil, which allows us to disentangle the effects of con glomerate mergers and of horizontal mergers on price, quan tity, and quality indicators. Our findings show that multiunit organizations are able to increase some quality indicators. As for the effect on price and quantity, results are different. For conglomerate mergers, we estimated an increase in the num ber of freshmen and tuition fees, whereas for acquisitions that lead to horizontal concentration there is no increase in quan tity, just in prices. Also these effects are larger the smaller the market share of the acquired HEI. On the whole, our findings are consistent with the hypothesis that multiunit operations increase efficiency, but only conglomerate mergers tend to pass those gains on to consumers. Results also indicate that greater caution should be taken in market extension mergers when the acquired firm has a clear dominant position. |
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