Kazutaka Takechi

In Search of Synergy Effects: Mergers and Productivity

We propose an alternative method for investigating whether firms improve performance through mergers after taking into account the selection bias of merging firms. We simultaneously consider the dynamics of firm performance and the merger decision by employing full information maximum likelihood (FIML) estimation. Our study differs from previous studies in that state dependence, unobservable heterogeneity, and selection bias are incorporated simultaneously. Because the effects of mergers may be felt gradually, the dynamic effects of mergers and the factors associated with these dynamics should be taken into account. Our FIML approach complements the strategy used in the extant literature for investigating the effects of mergers on firm performance.

The Price of Distance: Producer Heterogeneity, Pricing to Market, and Geographic Barriers

This study investigates the effect of distance on price differentials across regions. To identify the distance effect, we need to incorporate producer heterogeneity and pricing-to-market behavior. Because geographic barriers alter the threshold levels of productivity to set a positive price across markets, the effect of distance on price differentials can be underestimated if heterogeneity and pricing to market are not accounted for. By incorporating these factors, empirical analysis using micro-level data reveals that the distance effect is significantly large, suggesting that the price of geographic barriers is still high for regional transportation.