What Determines Heterogeneous Merger Effects on Competitive Outcomes?

We examine whether heterogeneous merger effects predominantly stem from technological or product market heterogeneities. Using detailed firm and product-specific information, we employ a heterogeneous merger effects model. Our results show that merging firms realize substantial heterogeneous post-merger effects on competitive outcomes such as production or prices. Merger effects vary substantially across merging firms, depending on the firms' pre-merger efficiency levels, price elasticities, and innovative activities. Firms' efficiency level and price elasticities prior to merging determine large post-merger heterogeneities. The results show that product market attributes (differences in inefficiencies and price elasticities) cause larger post-merger heterogeneities compared with technology market attributes.