Post-merger Price Dynamics Matters, So Why Do Merger Retrospectives Ignore It?

Mariuzzo, Franco and Ormosi, Peter L. (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
Depositing User: LivePure Connector
Date Deposited: 24 Sep 2019 10:30
Last Modified: 21 Jul 2020 01:33
URI: https://ueaeprints.uea.ac.uk/id/eprint/72357
DOI: 10.1007/s11151-019-09719-0

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