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Static and dynamic merger effects: A market share based empirical analysis

  • Packalen, Mikko
  • Sen, Anindya

Merger-specific efficiencies continue to play a relatively small role in merger enforcement and merger retrospectives. Motivated by the paucity of empirical analyses of merger-specific efficiencies, we examine a merger's market share effects. Standard merger theory predicts that if merger-specific efficiencies are present, the merged firm should regain market share in the long run. We estimate short- and long-run merger effects on market shares from the divestiture of Texaco's Canadian assets. Using a difference-in-difference specification we compare changes for the merging firm against changes for other vertically integrated firms in the same market. A general equilibrium type effect renders our estimates biased but the sign of each effect is consistently estimated. Our approach is a useful complement to across-market comparisons, which are often hindered by the difficulty of finding control markets that experience the same supply and demand shocks as the treatment markets.

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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 36 (2013)
Issue (Month): C ()
Pages: 12-24

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Handle: RePEc:eee:irlaec:v:36:y:2013:i:c:p:12-24
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

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