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Impact evaluation of merger control decisions

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Listed author(s):
  • Budzinski, Oliver

Abstract

This paper provides a comparative analysis of methods for the empirical ex post evaluation of merger control decisions. It develops a competition-policy oriented framework of assessment criteria for the leading evaluation methods and applies them to structural modeling and simulation, differences-in-differences methods, event studies as well as survey-based methods. It concludes that a method-mix is recommendable, however, under the exclusion of event studies that fail to safeguard a minimum level of reliability of their results. Furthermore, the paper warns against overly optimistic expectations about the effects of systematic impact evaluations of merger decisions.

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Paper provided by Ilmenau University of Technology, Institute of Economics in its series Ilmenau Economics Discussion Papers with number 75.

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Date of creation: 2012
Handle: RePEc:zbw:tuiedp:75
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Keywords: empirical methods of industrial organization; merger control; competition; policy; antitrust decisions; comparative analysis;

Find related papers by JEL classification:

  • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
  • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
  • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
  • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
  • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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  1. McAfee, R. Preston & Williams, Michael A., 1988. "Can event studies detect anticompetitive mergers?," Economics Letters, Elsevier, vol. 28(2), pages 199-203.
  2. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Environmental and Business Economics.
  3. Oliver Budzinski, 2011. "The Institutional Framework for Doing Sports Business: Principles of EU Competition Policy in Sports Markets," Working Papers 108/11, University of Southern Denmark, Department of Environmental and Business Economics.
  4. Josef Drexl & Wolfgang Kerber & Rupprecht Podszun (ed.), 2011. "Competition Policy and the Economic Approach," Books, Edward Elgar Publishing, number 13786.
  5. repec:pri:cepsud:140weinberg is not listed on IDEAS
  6. Oliver Budzinski & Isabel Ruhmer, 2008. "Merger Simulation in Competition Policy: A Survey," MAGKS Papers on Economics 200807, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  7. Tomaso Duso & Klaus Gugler & Florian Szücs, 2013. "An Empirical Assessment of the 2004 EU Merger Policy Reform," Economic Journal, Royal Economic Society, vol. 123(11), pages 596-619, November.
  8. Oliver Budzinski, 2010. "An Institutional Analysis of the Enforcement Problems in Merger Control," Working Papers 101/10, University of Southern Denmark, Department of Environmental and Business Economics.
  9. Aviv Nevo, 2000. "Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 395-421, Autumn.
  10. Buccirossi, Paolo & Ciari, Lorenzo & Duso, Tomaso & Spagnolo, Giancarlo & Vitale, Cristiana, 2009. "Measuring the deterrence properties of competition policy: The competition policy indexes," Discussion Papers, Research Unit: Competition and Innovation SP II 2009-15, Social Science Research Center Berlin (WZB).
  11. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin, 2010. "Is the event study methodology useful for merger analysis? A comparison of stock market and accounting data," International Review of Law and Economics, Elsevier, vol. 30(2), pages 186-192, June.
  12. Eckbo, B Espen & Wier, Peggy, 1985. "Antimerger Policy under the Hart-Scott-Rodino Act: A Reexamination of the Market Power Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 119-149, April.
  13. 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.
  14. Orley C. Ashenfelter & Daniel S. Hosken & Matthew C. Weinberg, 2013. "The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool," American Economic Journal: Economic Policy, American Economic Association, vol. 5(1), pages 239-261, February.
  15. Brian Diepold & Robert Feinberg & David Round & Jeremy Tustin, 2008. "Merger Impacts on Investor Expectations: An Event Study for Australia," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 15(1), pages 45-62.
  16. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2011. "How effective is European merger control?," European Economic Review, Elsevier, vol. 55(7), pages 980-1006.
  17. Budzinski, Oliver, 2012. "Empirische Ex-Post Evaluation von wettbewerbspolitischen Entscheidungen: Methodische Anmerkungen," Ilmenau Economics Discussion Papers 69, Ilmenau University of Technology, Institute of Economics.
  18. Hopkins, Yvette S. & Connor, John M., 1992. "A Re-Examination Of Event Studies Applied To Challenged Horizontal Mergers," Working Papers 116105, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  19. Haji Ali Beigi, Maryam & Budzinski, Oliver, 2012. "On the use of event studies to evaluate economic policy decisions: A note of caution," Ilmenau Economics Discussion Papers 80, Ilmenau University of Technology, Institute of Economics.
  20. Oliver Budzinski, 2009. "An international multilevel competition policy system," International Economics and Economic Policy, Springer, vol. 6(4), pages 367-389, December.
  21. Oilver Budzinski & Katharina Wacker, 2007. "The Prohibition of the Proposed Springer-ProSiebenSat.1-Merger: How much Economics in German Merger Control?," Marburg Working Papers on Economics 200704, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  22. Budzinski, Oliver & Christiansen, Arndt, 2007. "The Oracle/PeopleSoft case: unilateral effects, simulation models and econometrics in contemporary merger control," IBES Diskussionsbeiträge 157, University of Duisburg-Essen, Institute of Business and Economic Studie (IBES).
  23. Sven-Olof Fridolfsson & Johan Stennek, 2010. "Industry Concentration and Welfare: On the Use of Stock Market Evidence from Horizontal Mergers," Economica, London School of Economics and Political Science, vol. 77(308), pages 734-750, October.
  24. Mats Bergman, 2008. "Quis Custodiet Ipsos Custodes? or Measuring and Evaluating the Effectiveness of Competition Enforcement," De Economist, Springer, vol. 156(4), pages 387-409, December.
  25. Damien Neven & Hans Zenger, 2008. "Ex Post Evaluation of Enforcement: A Principal-Agent Perspective," De Economist, Springer, vol. 156(4), pages 477-490, December.
  26. Stillman, Robert, 1983. "Examining antitrust policy towards horizontal mergers," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 225-240, April.
  27. 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.
  28. Ellert, James C, 1976. "Mergers, Antitrust Law Enforcement and Stockholder Returns," Journal of Finance, American Finance Association, vol. 31(2), pages 715-732, May.
  29. Paul W. Dobson & Claudio A. Piga, 2009. "Mergers and Business Model Assimilation: Evidence from Low-Cost Airlines Takeovers," Discussion Paper Series 2009_2, Department of Economics, Loughborough University, revised Feb 2009.
  30. Kara M. Reynolds, 2005. "Anticipated versus Realized Benefits: Can Event Studies Be Used To Predict the Impact of New Regulations?," International Trade 0512005, EconWPA.
  31. Peters, Craig, 2006. "Evaluating the Performance of Merger Simulation: Evidence from the U.S. Airline Industry," Journal of Law and Economics, University of Chicago Press, vol. 49(2), pages 627-649, October.
  32. Paolo Buccirossi & Lorenzo Ciari & Tomaso Duso & Sven-Olof Fridolfsson & Giancarlo Spagnolo & Cristiana Vitale, 2008. "A Short Overview of a Methodology for the Ex-Post Review of Merger Control Decisions," De Economist, Springer, vol. 156(4), pages 453-475, December.
  33. Eckbo, B Espen, 1992. " Mergers and the Value of Antitrust Deterrence," Journal of Finance, American Finance Association, vol. 47(3), pages 1005-1029, July.
  34. Barton, David M & Sherman, Roger, 1984. "The Price and Profit Effects of Horizontal Merger: A Case Study," Journal of Industrial Economics, Wiley Blackwell, vol. 33(2), pages 165-177, December.
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Cited by:

  1. Haji Ali Beigi, Maryam & Budzinski, Oliver, 2012. "On the use of event studies to evaluate economic policy decisions: A note of caution," Ilmenau Economics Discussion Papers 80, Ilmenau University of Technology, Institute of Economics.

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