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 substantially increased concentration among department stores in Denver and Southern California. When this acquisition was announced, department store chains with stores in these areas had higher abnormal returns than other department store chains. This finding suggests that this acquisition may have reduced competition among department stores since investors would have bid up the stock price of rival department stores if they believed that this acquisition would lead to higher retail prices in Denver and Southern California.