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

Gergely Csorba (), Gabor Koltay and David Farkas ()
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David Farkas: Hungarian Competition Authority

No 1118, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: 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.

Keywords: ex post evaluation; mergers; difference-in-differences estimation; treatment effects; retail gasoline (search for similar items in EconPapers)
JEL-codes: D43 L13 L49 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-05
New Economics Papers: this item is included in nep-bec and nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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