Anticompetitive effects of horizontal acquisitions: The impact of within-industry product similarity

Maryam Fathollahi, Jarrad Harford, Sandy Klasa

Research output: Contribution to journalArticlepeer-review

12 Scopus citations


Theory predicts that horizontal acquisitions can effectively increase incumbent firms’ market power in concentrated industries with high product similarity. Using a novel measure for industry product similarity, we show that in such industries firms’ propensity to make horizontal acquisitions is greater and that the acquisitions result in more positive announcement returns for the acquirer and rival firms and in a larger premium paid for the target. Also, the deals harm dependent customer and supplier firms and they are more likely to be challenged by antitrust authorities. Overall, by emphasizing the importance of product similarity, our results help explain mixed empirical findings on whether horizontal acquisitions are used to reduce competition intensity.

Original languageEnglish (US)
Pages (from-to)645-669
Number of pages25
JournalJournal of Financial Economics
Issue number2
StatePublished - May 2022


  • Horizontal acquisitions
  • Industry concentration
  • Product market competition
  • Product similarity

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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