Post-merger price dynamics matters, so why do merger retrospectives ignore it?

Mariuzzo, Franco ORCID: https://orcid.org/0000-0003-4604-1054 and Ormosi, Peter L. ORCID: https://orcid.org/0000-0001-6472-6511 (2019) Post-merger price dynamics matters, so why do merger retrospectives ignore it? Review of Industrial Organization, 55 (3). pp. 403-429. ISSN 0889-938X

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Abstract

The overwhelming majority of retrospective merger studies pool the post-merger data to estimate the average price effect of the merger. Pooled post-merger estimates ignore key information about price dynamics and are unable to identify if post-merger prices revert to pre-merger levels within the same time period. We provide evidence—from a meta-analysis of over 600 previous market-level price effect estimates, and a set of Monte Carlo experiments—that using pooled models often leads to erroneous conclusions: for example by wrongly concluding that the merger increased prices, even when this price increase was only temporary.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
Faculty of Social Sciences > Norwich Business School
UEA Research Groups: Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Faculty of Social Sciences > Research Groups > Industrial Economics
Faculty of Social Sciences > Research Groups > Responsible Business Regulation Group
Depositing User: LivePure Connector
Date Deposited: 24 Sep 2019 10:30
Last Modified: 28 Apr 2023 00:05
URI: https://ueaeprints.uea.ac.uk/id/eprint/72357
DOI: 10.1007/s11151-019-09719-0

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