Global giants and local stars: How changes in brand ownership affect competition

Thierry Mayer, Vanessa Alviarez and Keith Head

No 14628, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Multinational acquisitions, unlike greenfield investments, can subtract from the number of active competitors. The outcomes for consumers depend on the change in markups and whether new owners implement significant quality or productivity improvements. We assess the consequences of multinational acquisitions in beer and spirits. Rather than confining the study to an individual country, we apply recent methods with minimal data requirements to conduct a worldwide evaluation. After correcting for severe limited mobility bias, owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counterfactual national merger regulation. The US beer price index would be 4--7\% higher had competition authorities not forced divestitures. On the other hand, up to 30\% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU.

Keywords: Oligopoly; Markups; Concentration; Firm effects; Brands; frictions; Mergers and acquisitions; Multinationals; Competition policy (search for similar items in EconPapers)
JEL-codes: F12 F23 F61 L13 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-com, nep-ind and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition (2025)
Working Paper: Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition (2021)
Working Paper: Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition (2021)
Working Paper: Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition (2021)
Working Paper: Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition (2021)
Working Paper: Global giants and local stars: How changes in brand ownership affect competition (2020)
Working Paper: Global Giants and Local Stars: How Changes in Brand Ownership Affect Competition (2020)
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