THERE are a number of important reasons why economists have shown great interest in the analysis of merger activity in all advanced industrial societies. The first is that merger activity has been a major cause of rising concentration. In the case of the U.K. a comparison of five estimates made by different researchers led the authors of a 1978 government green paper [4] to the view that since the late 1950s, mergers accounted for half of the growth in concentration. The rise in concentration in turn, creates concern because of the possible misallocation of resources, the possible abuse of market power, and the political and social impact of concentrated economic strengh in giant firms. A second reason is that because mergers have been major instruments of growth by firms and often involve large scale financial outlays, there is interest in the extent to which mergers have brought gains or losses to the firms involved, including their shareholders. There is a third reason which is connected more narrowly with the development of theories of the firm. The unending debate between theories based on various kinds of maximising behaviour (profit maximising, growth maximising etc.) and as between maximising (under constraints) and forms of satisficing, has led to attempts to formulate stable hypotheses drawn from such theories. Such hypotheses often involve the role of mergers in, for example, managerial utility functions principally directed at growth, the role of the stock market as a "market in control" which can discipline firms to conform to profit maximising norms etc. These three reasons for interest in merger analysis are clearly inter-related and all create interest in the determinants of merger activity.