Mahelet G. Fikru

Can a Merger Take Place among Symmetric Firms

The literature on mergers and acquisitions shows that a merger among identical firms is not profitable. This study develops a theoretical framework for understanding mergers among identical firms in a pollution-intensive sector. We show that if environmental policies adjust with a change in market structure because of a merger, such a merger can be profitable.

Perspectives from the Field: Environmental Policy and Mergers in Toxic-Intensive Sectors

With the recent rise in merger and acquisition activities among polluting firms, a rigorous study of the complex relationship between environmental variables and merger incentives is very important. While there is a wide array of literature on incentives to merge, the following questions have not yet been satisfactorily resolved: Could environmental policies alter the incentive to acquire or merge with other firms in the industry? Could antitrust policies be improved to consider environmental externalities? Could huge mergers in polluting sectors possibly have a say in environmental policy making?