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Separating the ex post effects of mergers: an analysis of structural changes on the Hungarian retail gasoline market

  • Gergely Csorba


    (Institute of Economics - Hungarian Academy of Sciences)

  • Gabor Koltay


    (DG for Economic and Financial Affairs of the European Commission)

  • David Farkas


    (Hungarian Competition Authority)

This paper develops an empirical method to identify the price effects of simultaneous mergers and to separate the different effects on the prices of the buyer and seller firms and on the prices of their respective competitors. Our difference-in-differences approach exploits variation in the presence of merging firms across local markets to form different treatment-control group pairs in order to estimate separate effects for each type of firms affected by the mergers. We apply this method to provide an ex post evaluation of two almost simultaneous mergers in the Hungarian retail gasoline market. We show that both mergers resulted in a significantly positive but economically negligible price effect, but while the first merger affected only the prices of buyer firm's stations, the second had an effect on the prices of seller's stations and of its competitors. We also demonstrate that the results are not sensitive to the assumed dates when the mergers effectively change the firms' pricing policy.

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Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 1118.

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Length: 36 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:has:discpr:1118
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  1. Jeffrey R. Campbell & Hugo Hopenhayn, 2003. "Market size matters," Working Paper Series WP-03-12, Federal Reserve Bank of Chicago.
  2. Ali Hortacsu & Chad Syverson, 2008. "Cementing Relationships: Vertical Integration, Foreclosure, Productivity, and Prices," Working Papers 08-41, Center for Economic Studies, U.S. Census Bureau.
  3. Philippe Choné & Laurent Linnemer, 2010. "A Treatment Effect Method for Merger Analysis with an Application to Parking Prices in Paris," CESifo Working Paper Series 3268, CESifo Group Munich.
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