Growing through the merger and acquisition |
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Institution: | 1. Department of Materials and Bioprocess Engineering, School of Chemical Engineering, University of Campinas, 13083-852, Campinas, São Paulo, Brazil;2. Center for Molecular Biology and Genetic Engineering, University of Campinas, 13083-875, Campinas, São Paulo, Brazil |
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Abstract: | The paper studies with an endogenous growth model how the merger and acquisition (M&A) affects the aggregate growth rate. We model the M&A as a capital reallocation process, which can increase both productivity and growth rates of firms. The model is tractable and greatly consistent with patterns observed in the M&A at the micro level. Matching our model to the data, we find that prohibiting the M&A would lead to the reduction of the aggregate growth rate of US economy by 0.1% and the reduction of the aggregate TFP by 5%. |
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