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The Effect of Mergers on Consumer Prices: Evidence from Five Mergers on the Enforcement Margin

  • Orley Ashenfelter
  • Daniel Hosken

In this paper we propose a method to evaluate the effectiveness of U.S. horizontal merger policy and apply it to the study of five recently consummated consumer products mergers. We select the mergers from those that, from the public record, seem most likely to be problematic. Thus, we estimate an upper bound on the likely price effect of completed mergers. Our study employs retail scanner data and uses familiar panel data program evaluation procedures to measure price changes. Our results indicate that four of the five mergers resulted in some increases in consumer prices, while the fifth merger had little effect.

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File URL: http://dx.doi.org/10.1086/605092
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/605092
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 53 (2010)
Issue (Month): 3 ()
Pages: 417 - 466

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Handle: RePEc:ucp:jlawec:doi:10.1086/605092
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," CPI Journal, Competition Policy International, vol. 5.
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  16. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  17. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-60, November.
  18. Carlton Dennis W, 2009. "How to Measure the Effectiveness of U.S. Merger Policy," The Economists' Voice, De Gruyter, vol. 6(7), pages 1-4, July.
  19. Dennis W. Carlton, 2009. "Why We Need to Measure the Effect of Merger Policy and How to Do It," NBER Working Papers 14719, National Bureau of Economic Research, Inc.
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  25. Igal Hendel & Aviv Nevo, 2005. "Measuring the Implications of Sales and Consumer Inventory Behavior," NBER Working Papers 11307, National Bureau of Economic Research, Inc.
  26. Martin Pesendorfer, 2002. "Retail Sales: A Study of Pricing Behavior in Supermarkets," The Journal of Business, University of Chicago Press, vol. 75(1), pages 33-66, January.
  27. Luke Froeb & Daniel Hosken & Janis Pappalardo, 2004. "Economics Research at the FTC: Information, Retrospectives, and Retailing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(4), pages 353-374, October.
  28. Vita, Michael G & Sacher, Seth, 2001. "The Competitive Effects of Not-for-Profit Hospital Mergers: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 63-84, March.
  29. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
  30. Justine S. Hastings & Richard J. Gilbert, 2005. "MARKET POWER, VERTICAL INTEGRATION AND THE WHOLESALE PRICE OF GASOLINE -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 469-492, December.
  31. 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.
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