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 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 (C) 2010 Elsevier B V All rights reserved