Sunday, March 30, 2008
Posted by D. Daniel Sokol
Orley Ashenfelter (Princeton Department of Economics) and Daniel Hosken (FTC) bring us The Effect of Mergers on Consumer Prices: Evidence from Five Selected Case Studies.
ABSTRACT: In this paper we propose a method to evaluate the effectiveness of U.S. horizontal merger policy and apply it to the study of five recent consumer product mergers. We selected the mergers from those that, from the public record, seemed to be most problematic for the antitrust agencies. Thus we estimate an upper bound on the likely price effect of completed mergers. Our study employs retail scanner data and uses familiar panel data program evaluation procedures to measure price changes. Our results indicate that four of the five mergers resulted in some increases in consumer prices, while the fifth merger had little effect.