Did May Company's acquisition of Associated Dry Goods Corporation reduce competition? An event study analysis

May Department Store's 1986 acquisition of Associated Dry Goods substantial ly increased concentration among department stores in Denver and Southern C alifornia. When this acquisition was announced, department store chains wit h stores in these areas had higher abnormal returns than other department s tore chains. This finding suggests that this acquisition may have reduced c ompetition among department stores since investors would have bid up the st ock price of rival department stores if they believed that this acquisition would lead to higher retail prices in Denver and Southern California.