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α: calibrated so average coauthorship-adjusted count equals average raw count
In recent years, mergers and acquisitions (M&As) in the agricultural and food sector have increased market power, and the resulting higher prices have eroded the competitiveness of U.S. firms in the world market. This study examines how mergers and acquisitions in the agri‐food industry contributed to a reduction in exports, an increase in imports, and a worsening of the trade balance. Toward this goal, we develop a model based on New Trade and M&A theories and theoretically assess the effects of M&As on exports, imports, and trade balance in the agricultural and food sector. We test our theoretical predictions empirically using a causal difference‐in‐differences approach focused on estimating short‐run trade effects. Our findings show that large mergers lead to a decrease in exports for products sold by these firms, and these declines in exports persist for several years following the merger. We also find that large mergers lead to an increase in the level of imports for products produced by the merging firms. We estimate that these mergers decreased the agricultural and food sector trade balance by $1.67 billion USD annually during the 2005 to 2019 period.