An Empirical Analysis of Mergers: Efficiency Gains and Impact on Consumer Prices

Bonnet, Céline and Schain, Jan Philip (2020) An Empirical Analysis of Mergers: Efficiency Gains and Impact on Consumer Prices. Journal of Competition Law and Economics. (In Press)

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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: Article
Language: English
Date: 2020
Refereed: Yes
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 13 Jan 2020 14:00
Last Modified: 13 Jan 2020 14:00
["eprint_fieldname_oai_identifier" not defined]: oai:tse-fr.eu:123938
URI: http://publications.ut-capitole.fr/id/eprint/33826

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