We study the dynamics of market entry following mergers and acquisitions (M) and the behavior of recent entrants in supplying output that might be withdrawn by the consolidating firms. The data, drawn from the banking industry, suggest that M are associated with subsequent increases in the probability of entry. The estimates suggest that M explain more than 20% of entry in metropolitan markets and more than 10% of entry in rural markets. Additional results suggest that bank age has a strong negative effect on the small business lending of small banks but that M have little influence on this lending.
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Berger et al. (1999) studied this question.