Indicative Price Rise with synergies

Benoît Voudon

Economics Letters, 2022, vol. 218, issue C

Abstract: This paper extends the evaluation of mergers’ unilateral effect on prices to incorporate the effect of variable cost synergies. The Indicative Price Rise metric was first introduced by Shapiro (1995), which allows to estimate the price increase caused by a merger based on pre-merger metrics such as prices, margins and diversion ratios. We derive the IPR formula including synergies for linear demand and isoelastic demand.

Keywords: Horizontal merger; Unilateral effects; Indicative Price Rise; Linear demand; Isoelastic demand (search for similar items in EconPapers)
JEL-codes: L11 L22 L41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:218:y:2022:i:c:s0165176522002543

DOI: 10.1016/j.econlet.2022.110732

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