Post-merger price dynamics matter, so why do merger retrospectives ignore them?

Franco Mariuzzo and Peter Ormosi
Additional contact information
Franco Mariuzzo: Centre for Competition Policy and School of Economics, University of East Anglia
Peter Ormosi: Centre for Competition Policy and Norwich Business School, University of East Anglia

No 2016-05, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: The price effect of past mergers has been extensively researched over the last two decades. The overwhelming majority of these studies pool post-merger data to estimate the average price effect of a merger. Merger guidelines agree that mergers should be approved if market dynamics, such as entry, eliminate negative welfare effects. However, pooled post-merger data ignore key information about price dynamics and are unable to identify if post-merger prices eventually revert to pre-merger levels or drift away. We provide evidence, from a meta-analysis of previous works, and a set of Monte Carlo experiments, on how serious this problem is. Finally, we show the conditions where pooled data studies make an erroneous conclusion about the merger.

Keywords: mergers; merger retrospectives; meta study; Monte Carlo simulation (search for similar items in EconPapers)
JEL-codes: C51 K21 L49 (search for similar items in EconPapers)
Date: 2017-11-24
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ueaeco.github.io/working-papers/papers/ccp/CCP-16-05.pdf main text (application/pdf)

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: https://EconPapers.repec.org/RePEc:uea:ueaccp:2016_05

Ordering information: This working paper can be ordered from
Juliette Hardman, Center for Competition Policy, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK

Access Statistics for this paper

More papers in Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Juliette Hardmad ().