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Mergers and difference-in-difference estimator: Why firms do not increase prices?

Juan Jiménez González () and Jordi Perdiguero ()

European Journal of Law and Economics, 2018, vol. 45, issue 2, No 4, 285-311

Abstract: Abstract Difference-in-difference methods are being increasingly used to analyze the impact of mergers on pricing and other market equilibrium outcomes. Using evidence from an exogenous merger between two retail gasoline companies in a specific market in Spain, this paper shows how concentration did not lead to a price increase. In fact, the conjectural variation model concludes that the existence of a collusive agreement before and after the merger accounts for this result, rather than the existence of efficient gains. This result may explain empirical evidence reported in the literature according to which mergers between firms do not have significant effects on prices.

Keywords: Mergers; Gasoline market; Difference-in-difference; Conjectural variation (search for similar items in EconPapers)
JEL-codes: L12 L41 L44 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Mergers and difference-in-difference estimator: why firms do not increase prices? (2012) Downloads
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