Tuesday, February 19, 2013
Posted by D. Dnaiel Sokol
Daniel S. Hosken, Government of the United States of America - Federal Trade Commission, Luke Olson, Government of the United States of America - Federal Trade Commission and Loren Smith, Government of the United States of America - Federal Trade Commission ask Do Retail Mergers Affect Competition? Evidence from Grocery Retailing.
ABSTRACT: This study estimates the price effects of horizontal mergers in the U.S. grocery retailing industry. We examine fourteen regions affected by mergers including both highly concentrated and relatively unconcentrated markets. We identify price effects by comparing markets affected by mergers to unaffected markets using both difference-in-difference estimation and the synthetic control method. Our results are robust to the choice of control group and estimation technique. We find that mergers in highly concentrated markets are most frequently associated with price increases, while mergers in less concentrated markets are most often associated with price decreases.