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The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool

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  • Orley C. Ashenfelter
  • Daniel S. Hosken
  • Matthew C. Weinberg

Abstract

Many experts speculate that US antitrust policy towards horizontal mergers has been too lenient. We estimate the price effects of Whirlpool's acquisition of Maytag to provide new evidence on this debate. We compare price changes in appliance markets most affected by the merger to markets where concentration changed much less or not at all. We estimate price increases for dishwashers and relatively large price increases for clothes dryers, but no price effects for refrigerators or clothes washers. The combined firm's market share fell across all four affected categories, and the number of distinct appliance products offered for sale fell. (JEL G34, K21, L11, L41, L68)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 5 (2013)
Issue (Month): 1 (February)
Pages: 239-61

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Handle: RePEc:aea:aejpol:v:5:y:2013:i:1:p:239-61

Note: DOI: 10.1257/pol.5.1.239
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  1. Ambarish Chandra & Allan Collard-Wexler, 2009. "Mergers in Two-Sided Markets: An Application to the Canadian Newspaper Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(4), pages 1045-1070, December.
  2. David Genesove & Wallace P. Mullin, 2001. "Rules, Communication and Collusion: Narrative Evidence from the Sugar Institute Case," NBER Working Papers 8145, National Bureau of Economic Research, Inc.
  3. Jain, Satish (ed.), 2010. "Law and Economics," OUP Catalogue, Oxford University Press, number 9780198067733, September.
  4. Clifford Winston & Vikram Maheshri & Scott M. Dennis, 2011. "Long-Run Effects of Mergers: The Case of U.S. Western Railroads," Journal of Law and Economics, University of Chicago Press, vol. 54(2), pages 275 - 304.
  5. Steven T. Berry & Joel Waldfogel, 2001. "Do Mergers Increase Product Variety? Evidence From Radio Broadcasting," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 1009-1025, August.
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Cited by:
  1. Emilie Dargaud & Carlo Reggiani, . "Horizontal Mergers in the Spokes Model," Discussion Papers 09/12, Department of Economics, University of York.
  2. Budzinski, Oliver, 2012. "Impact evaluation of merger control decisions," Ilmenau Economics Discussion Papers 75, Ilmenau University of Technology, Institute of Economics.
  3. Emilie Dargaud & Carlo Reggiani, 2012. "On the Price Effects of Horizontal Mergers : A Theoretical Interpretation," Working Papers 1222, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  4. Oliver Budzinski, 2011. "Impact Evaluation of Merger Decisions," Working Papers 112/11, University of Southern Denmark, Department of Environmental and Business Economics.
  5. Budzinski, Oliver, 2012. "Empirische Ex-Post Evaluation von wettbewerbspolitischen Entscheidungen: Methodische Anmerkungen," Ilmenau Economics Discussion Papers 69, Ilmenau University of Technology, Institute of Economics.

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