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

Juan Jiménez González and Jordi Perdiguero

No 201205, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Difference-in-Difference (DiD) 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. JEL classification: L12; L41; L44 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-02, Revised 2012-02
New Economics Papers: this item is included in nep-com and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Mergers and difference-in-difference estimator: Why firms do not increase prices? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:201205

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