Mergers as reallocation

Boyan Jovanovic, Peter L. Rousseau

    Research output: Contribution to journalArticle

    Abstract

    We model merger waves as reallocation waves, and argue that mergers spread new technology in a way that is similar to that of the entry and exit of firms. We focus on two periods: 1890-1930, during which electricity and the internal combustion engine spread through the U.S. economy, and 1970-2000-the Information Age. As the model implies, reallocation did rise during both epochs. The model also implies that exits should lead mergers during a transition, but this seems to have happened more emphatically in the electrification epoch.

    Original languageEnglish (US)
    Pages (from-to)765-776
    Number of pages12
    JournalReview of Economics and Statistics
    Volume90
    Issue number4
    DOIs
    StatePublished - Nov 1 2008

    ASJC Scopus subject areas

    • Social Sciences (miscellaneous)
    • Economics and Econometrics

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