An Empirical Analysis of Mergers

Bonnet, Céline and Schain, Jan Philip (2017) An Empirical Analysis of Mergers: Efficiency Gains and Impact on Consumer Prices. TSE Working Paper, n. 17-765, Toulouse

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Official URL: http://tse-fr.eu/pub/31503

Abstract

In this article, we extend the literature on merger simulation models by incorporating its potential synergy gains into structural econometric analysis. We present a three-step integrated approach. We estimate a structural demand and supply model, as in Bonnet and Dubois (2010). This model allows us to recover the marginal cost of each differentiated product. Then we estimate potential efficiency gains using the Data Envelopment Analysis approach of Bogetoft and Wang (2005), and some assumptions about exogenous cost shifters. In the last step, we simulate the new price equilibrium post merger taking into account synergy gains, and derive price and welfare effects. We use a homescan dataset of dairy dessert purchases in France, and show that for two of the three mergers considered, synergy gains could offset the upward pressure on prices post. Some mergers could then be considered as not harmful for consumers.

Item Type: Monograph (Working Paper)
Sub-title: Efficiency Gains and Impact on Consumer Prices
Language: English
Date: February 2017
Place of Publication: Toulouse
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 24 Feb 2017 09:35
Last Modified: 07 Mar 2018 13:24
OAI ID: oai:tse-fr.eu:31503
URI: http://publications.ut-capitole.fr/id/eprint/23074

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