Market And Welfare Effects Of Multi-Product Mergers With Reference To Tyson-IBP Merger

Abstract

In this paper, we provide a conceptual framework for analyzing the market and welfare effects of mergers that result in multiproduct firms producing strongly demand-related products and derive the conditions under which such type of mergers improve welfare. The Tyson-IBP merger is used as an empirical application of the model. Using estimates of own- and cross-price elasticities of demand for beef, pork, and chicken, we infer that the Tyson-IBP merger has generated the cost-efficiencies necessary to make consumers and livestock producers better off.