Do mergers improve efficiency? Evidence from restructuring the US electric power sector

This paper analyses the performance impact of the merger wave which took place in the US electricity industry during the period 1994–2003. It does so by analyzing the impact on operating and total cost in electricity distribution. While there are past studies of efficiency and productivity effects,...

Full description

Saved in:
Bibliographic Details
Published in:International journal of industrial organization 2010-11, Vol.28 (6), p.645-656
Main Authors: Kwoka, John, Pollitt, Michael
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Cost estimates
Data envelopment analysis
Economic concentration
Economic efficiency
Economic performance
Efficiency
Efficiency analysis
Electricity
Electricity distribution
Energy industry
Impact analysis
Mergers
Mergers Efficiency analysis Electricity distribution Data envelopment analysis
Productivity
Studies
U.S.A
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper analyses the performance impact of the merger wave which took place in the US electricity industry during the period 1994–2003. It does so by analyzing the impact on operating and total cost in electricity distribution. While there are past studies of efficiency and productivity effects, as well as of prices, profits, and other outcomes, this study differs in several ways. First, the database consists of many merging and non-merging firms, rather than only a few on which to base inferences. Second, all of these mergers arise in a single industry, greatly facilitating controlled comparison. Third, we have data on the several years of pre-merger and post-merger efficiency of the specific merging units, unlike virtually all past studies. Finally, we employ a powerful nonparametric technique—data envelopment analysis—to measure the efficiency of each operating unit. The results indicate that electricity mergers are not consistent with improved cost performance.
ISSN:0167-7187
1873-7986
DOI:10.1016/j.ijindorg.2010.03.001