On Merger Price-Effect Indicators: Costs of Simplification, Misspecification and Universality

László Bokor

International Journal of the Economics of Business, 2025, vol. 32, issue 2, 229-246

Abstract: Using horizontal merger simulations as benchmarks, I examine the performance of six demand-specific and three universal price-effect indicators under four demand systems, 3 to 5-firm markets, and symmetric and asymmetric variables (156 unique cases in total). In addition to showing their accuracy and precision, I also provide the false positive and negative rates for a continuous range of thresholds. The results show strikingly poor performance in several cases, highlighting the critical importance of broad prior knowledge in deciding which indicator is most appropriate in which situation.

Date: 2025
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DOI: 10.1080/13571516.2025.2501340

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