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“Mergers and difference-in-difference estimator: why firms do not increase prices?”

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Author Info

  • Juan Luis Jiménez

    ()
    (Facultad de Economía, Empresa y Turismo. Universidad de Las Palmas de Gran Canaria)

  • Jordi Perdiguero

    ()
    (Faculty of Economics, University of Barcelona)

Abstract

Difference-in-Difference (DiD) methods are being increasingly used to analyze the impact of mergers on pricing and other market equilibrium outcomes. Using evidence from an exogenous merger between two retail gasoline companies in a specific market in Spain, this paper shows how concentration did not lead to a price increase. In fact, the conjectural variation model concludes that the existence of a collusive agreement before and after the merger accounts for this result, rather than the existence of efficient gains. This result may explain empirical evidence reported in the literature according to which mergers between firms do not have significant effects on prices.

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File URL: http://www.ub.edu/irea/working_papers/2012/201205.pdf
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Bibliographic Info

Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201205.

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Length: 38 pages
Date of creation: Feb 2012
Date of revision: Feb 2012
Handle: RePEc:ira:wpaper:201205

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Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
Web page: http://www.ub.edu/irea/
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Related research

Keywords: Mergers; Gasoline Market; Difference-in-Difference; Conjectural Variation. JEL classification: L12; L41; L44;

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References

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Cited by:
  1. Jordi López-Tamayo & Vicente Royuela & Jordi Suriñach, 2012. "“Building a “quality in work” index in Spain”," AQR Working Papers 201204, University of Barcelona, Regional Quantitative Analysis Group, revised Feb 2012.
  2. Emilie Dargaud & Carlo Reggiani, 2012. "On the Price Effects of Horizontal Mergers: A Theoretical Interpretation," The School of Economics Discussion Paper Series 1201, Economics, The University of Manchester.
  3. Daniel Albalate, 2012. "“The Institutional, Economic and Social Determinants of Local Government Transparency”," IREA Working Papers 201210, University of Barcelona, Research Institute of Applied Economics, revised May 2012.
  4. Jordi Perdiguero & Juan Luis Jiménez, 2012. "“Policy options for the promotion of electric vehicles: a review”," IREA Working Papers 201208, University of Barcelona, Research Institute of Applied Economics, revised Mar 2012.

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