EconPapers    
Economics at your fingertips  
 

Does Merger Simulation Work? A "Natural Experiment" in the Swedish Analgesics Market Market

Jonas Björnerstedt and Frank Verboven

No 9027, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We exploit a natural experiment associated with a large merger in the Swedish market for analgesics (painkillers). We confront the predictions from a merger simulation study, as conducted during the investigation, with the actual merger effects over a two-year comparison window. The merger simulation model is based on a constant expenditures specification for the nested logit model (as an alternative to the typical unit demand specification). The model predicts a large price increase of 34% by the merging firms, because there is strong market segmentation and the merging firms are the only competitors in the largest segment. The actual price increase after the merger is of a similar order of magnitude: +42% in absolute terms and +35% relative to the

Keywords: analgesics; constant expenditures nested logit; ex post merger analysis; merger simulation (search for similar items in EconPapers)
JEL-codes: L40 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-com and nep-ind
Date: 2012-07
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9027 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpr:ceprdp:9027

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=9027

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Series data maintained by ().

 
Page updated 2014-11-28
Handle: RePEc:cpr:ceprdp:9027