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PRINZ Seminar

Market power and decarbonisation: Are mergers green?

Costanza Tomaselli (Imperial College London)

Tuesday 21 May 2024 11:00 - 12:00

This event is both online and in person

SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

This paper explores the relationship between market concentration and environmental performance, with a particular focus on the aftermath of mergers. Central to our investigation is the question of whether mergers lead to a reduction in greenhouse gas (GHG) emissions, hence an improvement in environmental performance, by the resultant entity. Drawing from foundational economic principles, we hypothesize that increased market power, typically associated with reduced output relative to competitive market conditions, could similarly influence a firm's emissions profile, potentially lowering GHG emissions. This hypothesis introduces a complex tension between two pivotal policy objectives: the reduction of emissions and the preservation of competitive market structures. To further investigate this tension our analysis differentiates between mergers occurring in markets with varying degrees of concentration, examining the emissions outcomes in each context. Such an approach allows us to scrutinize the motivations behind mergers, questioning whether they are primarily driven by a quest for market dominance or a pursuit of operational efficiencies. Preliminary findings suggest that both mergers and acquisition exhibit a comparable impact on environmental indicators. This insight paves the way for a broader discussion on the dual objectives of companies in merger scenarios—enhancing market power versus achieving environmental efficiency. This paper contributes to the ongoing dialogue on the intersection of environmental and competition policy, offering novel empirical evidence on the environmental ramifications of mergers. By clarifying the alignment or divergence of firms' strategic motivations with policy goals, the study sheds light on the broader implications of corporate consolidation for sustainable development.

Participants are expected to adhere to the Events Code of Conduct.

This event will take place in SAL 2.04, 2nd Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

The building is labelled SAL on the map. Enter the building via Lincoln's Inn Fields.

LSE Campus Map