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Empirical Methods in Merger Analysis: Econometric Analysis of Pricing in FTC v. Staples

Author

Listed:
  • Orley Ashenfelter
  • David Ashmore
  • Jonathan Baker
  • Suzanne Gleason
  • Daniel Hosken

Abstract

In 1997, the US Federal Trade Commission challenged the proposed merger of two office supply superstores, Staples and Office Depot in US District Court. Both the government and merging parties presented econometric studies examining the merger's likely impact on consumer pricing, predicting a price increase of 8.6% and 0.9% respectively. This article uses the extensive public record to provide a detailed discussion of the econometric models used in the case and to show how differences between the models led to the discrepancy between these estimates.

Suggested Citation

  • Orley Ashenfelter & David Ashmore & Jonathan Baker & Suzanne Gleason & Daniel Hosken, 2006. "Empirical Methods in Merger Analysis: Econometric Analysis of Pricing in FTC v. Staples," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(2), pages 265-279.
    • Handle: RePEc:taf:ijecbs:v:13:y:2006:i:2:p:265-279
    DOI: 10.1080/13571510600784706
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    References listed on IDEAS

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    1. Betancourt, Roger R. & Gautschi, David, 1993. "Two essential characteristics of retail markets and their economic consequences," Journal of Economic Behavior & Organization, Elsevier, vol. 21(3), pages 277-294, August.
    2. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    3. Roger R. Betancourt, 2004. "The Economics of Retailing and Distribution," Books, Edward Elgar Publishing, number 3511.
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    Citations

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    Cited by:

    1. Schuetz, Jenny, 2015. "Why are Walmart and Target Next-Door neighbors?," Regional Science and Urban Economics, Elsevier, vol. 54(C), pages 38-48.
    2. Katja Seim & Michael Sinkinson, 2016. "Mixed pricing in online marketplaces," Quantitative Marketing and Economics (QME), Springer, vol. 14(2), pages 129-155, June.
    3. Ronald W. Cotterill, 2007. "Market Definition and Market Power in the British Supermarket Industry," Food Marketing Policy Center Research Reports 098, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    4. Mitsukuni Nishida, 2015. "Estimating a Model of Strategic Network Choice: The Convenience-Store Industry in Okinawa," Marketing Science, INFORMS, vol. 34(1), pages 20-38, January.
    5. Keith Brand & Martin Gaynor & Patrick McAlvanah & David Schmidt & Elizabeth Schneirov, 2014. "Economics at the FTC: Office Supply Retailers Redux, Healthcare Quality Efficiencies Analysis, and Litigation of an Alleged Get-Rich-Quick Scheme," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 45(4), pages 325-344, December.
    6. MacDonald, James M. & Dong, Xiao & Fuglie, Keith O., 2023. "Concentration and Competition in U.S. Agribusiness," Economic Information Bulletin 337566, United States Department of Agriculture, Economic Research Service.
    7. Mitsuru Sunada, 2012. "Competition among movie theaters: an empirical investigation of the Toho–Subaru antitrust case," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 36(3), pages 179-206, August.
    8. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," CPI Journal, Competition Policy International, vol. 5.
    9. Marie-Laure Allain & Claire Chambolle & Stéphane Turolla & Sofia Villas-Boas, 2013. "The Impact of Retail Mergers on Food Prices: Evidence from France," Working Papers hal-00920460, HAL.
    10. Farrell Joseph & Shapiro Carl, 2010. "Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-41, March.
    11. Alison Oldale & Joel Schrag & Christopher Taylor, 2021. "The 2010 Horizontal Merger Guidelines at Ten: A View from the FTC’s Bureau of Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(1), pages 33-50, February.
    12. Yun Jeong Choi & Jee Young Kim & Min Hee You, 2020. "Radius Restriction And Firms' Survival: Evidence From The Coffee Franchise Industry," Contemporary Economic Policy, Western Economic Association International, vol. 38(3), pages 496-514, July.
    13. Lawrence J. White, 2013. "Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches," Working Papers 13-13, New York University, Leonard N. Stern School of Business, Department of Economics.
    14. John K. Ashton, 2012. "Do Depositors Benefit from Bank Mergers? An Examination of the UK Deposit Market," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 19(1), pages 1-23, February.
    15. Yun Jeong Choi & Jee Young Kim & Min Hee You, 2017. "Radius Restriction and Firms' Survival: Evidence from the Coffee Franchise Industry," Working papers 2017rwp-115, Yonsei University, Yonsei Economics Research Institute.
    16. Orley C. Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," NBER Working Papers 14798, National Bureau of Economic Research, Inc.
    17. repec:pri:cepsud:183ashenfelter is not listed on IDEAS
    18. Daniel S. Hosken & Luke M. Olson & Loren K. Smith, 2018. "Do retail mergers affect competition? Evidence from grocery retailing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(1), pages 3-22, March.

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