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Impact Evaluation of Merger Decisions

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  • Oliver Budzinski

    ()
    (Department of Environmental and Business Economics, University of Southern Denmark)

Abstract

This paper provides a comparative analysis of methods for the empirical ex post evaluation of merger control decisions. It develops a competition-policy oriented framework of assessment criteria for the leading evaluation methods and applies them to structural modeling and simulation, differences-in-differences methods, event studies as well as survey-based methods. It concludes that a method-mix is recommendable, however, under the exclusion of event studies that fail to secure a minimum level of reliability regarding the evaluation results. Furthermore, it warns against overly optimistic expectations about the effects of systematic impact evaluations of merger decisions. I like to thank the participants of the OECD Roundtable „Impact Evaluation of Merger Decisions“ (Paris, Juni 2011), Arndt Christiansen and Knud Sinding for valua-ble comments on earlier versions of this paper as well as Janne Mordhorst for valuable editorial assistance.

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File URL: http://www.sdu.dk/~/media/Files/Om_SDU/Institutter/Miljo/ime/wp/budzinski112.ashx
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Bibliographic Info

Paper provided by University of Southern Denmark, Department of Environmental and Business Economics in its series Working Papers with number 112/11.

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Length: 38 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:sdk:wpaper:112

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Related research

Keywords: Empirical methods of industrial organization; merger control; competition policy; antitrust decisions; comparative analysis;

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References

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  1. Tomaso Duso & Klaus Gugler & Florian Szücs, 2010. "An Empirical Assessment of the 2004 EU Merger Policy Reform," CIG Working Papers SP II 2010-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  2. Paul W. Dobson & Claudio A. Piga, 2009. "Mergers and Business Model Assimilation: Evidence from Low-Cost Airlines Takeovers," Discussion Paper Series 2009_2, Department of Economics, Loughborough University, revised Feb 2009.
  3. Duso, Thomas & Gugler, Klaus & Yurtoglu, Burcin B., 2011. "How Effective is European Merger Control?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 354, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2006. "Is the Event Study Methodology Useful for Merger Analysis? A Comparison of Stock Market and Accounting Data," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 163, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. Stillman, Robert, 1983. "Examining antitrust policy towards horizontal mergers," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 225-240, April.
  6. Oliver Budzinski & Isabel Ruhmer, 2009. "Merger Simulation in Competition Policy: A Survey," Working Papers 82/09, University of Southern Denmark, Department of Environmental and Business Economics.
  7. Tomaso Duso & Damien J. Neven & Lars-Hendrik Röller, 2002. "The Political Economy of European Merger Control: Evidence using Stock Market Data," CIG Working Papers FS IV 02-34, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  8. Ellert, James C, 1976. "Mergers, Antitrust Law Enforcement and Stockholder Returns," Journal of Finance, American Finance Association, vol. 31(2), pages 715-32, May.
  9. Mats Bergman, 2008. "Quis Custodiet Ipsos Custodes? or Measuring and Evaluating the Effectiveness of Competition Enforcement," De Economist, Springer, vol. 156(4), pages 387-409, December.
  10. Orley C. Ashenfelter & Daniel S. Hosken & Matthew C. Weinberg, 2011. "The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool," NBER Working Papers 17476, National Bureau of Economic Research, Inc.
  11. Damien Neven & Hans Zenger, 2008. "Ex Post Evaluation of Enforcement: A Principal-Agent Perspective," De Economist, Springer, vol. 156(4), pages 477-490, December.
  12. Pinkse, Joris & Slade, Margaret E., 2004. "Mergers, brand competition, and the price of a pint," European Economic Review, Elsevier, vol. 48(3), pages 617-643, June.
  13. Brian Diepold & Robert Feinberg & David Round & Jeremy Tustin, 2008. "Merger Impacts on Investor Expectations: An Event Study for Australia," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(1), pages 45-62.
  14. McAfee, R. Preston & Williams, Michael A., 1988. "Can event studies detect anticompetitive mergers?," Economics Letters, Elsevier, vol. 28(2), pages 199-203.
  15. Eckbo, B Espen & Wier, Peggy, 1985. "Antimerger Policy under the Hart-Scott-Rodino Act: A Reexamination of the Market Power Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 119-49, April.
  16. Aviv Nevo, 2000. "Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 395-421, Autumn.
  17. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Environmental and Business Economics.
  18. Peters, Craig, 2006. "Evaluating the Performance of Merger Simulation: Evidence from the U.S. Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 49(2), pages 627-49, October.
  19. Eckbo, B Espen, 1992. " Mergers and the Value of Antitrust Deterrence," Journal of Finance, American Finance Association, vol. 47(3), pages 1005-29, July.
  20. Matthew Weinberg, 2007. "The Price Effects of Horizontal Mergers: A Survey," Working Papers 62, Princeton University, Department of Economics, Center for Economic Policy Studies..
  21. Oliver Budzinski, 2010. "An Institutional Analysis of the Enforcement Problems in Merger Control," Working Papers 101/10, University of Southern Denmark, Department of Environmental and Business Economics.
  22. Fridolfsson, Sven-Olof & Stennek, Johan, 2006. "Industry Concentration and Welfare - On the Use of Stock Market Evidence from Horizontal Mergers," CEPR Discussion Papers 5977, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Budzinski, Oliver, 2012. "Empirische Ex-Post Evaluation von wettbewerbspolitischen Entscheidungen: Methodische Anmerkungen," Ilmenau Economics Discussion Papers 69, Ilmenau University of Technology, Institute of Economics.
  2. Oliver Budzinski & Björn A. Kuchinke, 2012. "Deal or No Deal? Consensual Arrangements as an Instrument of European Competition Policy," Review of Economics, Lucius & Lucius, vol. 63(3), pages 265-292.
  3. Haji Ali Beigi, Maryam & Budzinski, Oliver, 2012. "On the use of event studies to evaluate economic policy decisions: A note of caution," Ilmenau Economics Discussion Papers 80, Ilmenau University of Technology, Institute of Economics.

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