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Ex-Post Merger Evaluation in the UK Retail Market for Books

Author

Listed:
  • Luca Aguzzoni
  • Elena Argentesi
  • Lorenzo Ciari
  • Tomaso Duso
  • Massimo Tognoni

Abstract

This paper empirically evaluates the price effects of the merger of two major book retail chains in the UK: Waterstone's and Ottakar's. We employ differences-in-differences techniques and use a rich dataset containing monthly scanner data information on a sample of 200 books sold in 60 stores in 50 different local markets for a period of four years around the merger. Since retail mergers may have either local or national effects (or both) according to the level at which retail chains set prices, we undertake an ex-post assessment of the impact of the merger at both levels. At the local level, we compare the changes in the average price charged before and after the merger in the shops located in overlap areas -i.e. areas where both chains were present before the merger- and in non-overlap areas -i.e. areas where only one chain was present before the merger. At the national level, we employ two distinct control groups to evaluate the merger, namely the competitors and the top-selling titles. We find that the merger did not result in an increase in prices either at the local or at the national level. We also perform heterogeneous treatment effects estimations in order to assess whether the effect of the merger differs along various dimensions of heterogeneity that are present in our data.

Suggested Citation

  • Luca Aguzzoni & Elena Argentesi & Lorenzo Ciari & Tomaso Duso & Massimo Tognoni, 2013. "Ex-Post Merger Evaluation in the UK Retail Market for Books," Discussion Papers of DIW Berlin 1310, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1310
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. L. Aguzzoni & E. Argentesi & P. Buccirossi & L. Ciari & T. Duso & M. Tognoni & C. Vitale, 2013. "They Played the Merger Game: A Retrospective Analysis in the UK Videogames Market," Working Papers wp908, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. 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.
    3. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.
    4. Tomaso Duso & Florian Szücs & Veit Böckers, 2017. "Abuse of Dominance and Antitrust Enforcement in the German Electricity Market," CESifo Working Paper Series 6681, CESifo Group Munich.
    5. Hviid, Morten & Izquierdo Sanchez, Sofia & Jaques, Sabine, 2016. "From publishers to self-publishing: The disruptive effects of digitalisation on the book industry," MPRA Paper 76057, University Library of Munich, Germany.
    6. Elena Argentesi & Albert Banal-Estanol & Jo Seldeslachts & Meagan Andrews, 2017. "A Retrospective Evaluation of the GDF/Suez Merger: Effects on Gas Hub Prices," Discussion Papers of DIW Berlin 1664, DIW Berlin, German Institute for Economic Research.
    7. Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Duso, Tomaso & Marrazzo, Alessia, 2016. "The effect of retail mergers on prices and variety: An ex-post evaluation," DICE Discussion Papers 225, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Ekaterina S. Demina & Evgeniy M. Ozhegov, 2017. "The Impact of Omnivorism on Consumer Choice: The Case of the Book Market," HSE Working papers WP BRP 175/EC/2017, National Research University Higher School of Economics.

    More about this item

    Keywords

    Mergers; Ex-post Evaluation; Book market; Retail sector;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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