Working Paper: NBER ID: w14798
Authors: Orley C. Ashenfelter; Daniel Hosken; Matthew Weinberg
Abstract: The challenge of effective merger enforcement is tremendous. U.S. antitrust agencies must, by statute, quickly forecast the competitive effects of mergers that occur in virtually every sector of the economy to determine if mergers can proceed. Surprisingly, given the complexity of the regulators task, there is remarkably little empirical evidence on the effects of mergers to guide regulators. This paper describes the necessity of retrospective analysis of past mergers in building an empirical basis for antitrust enforcement, and provides guidance on the key measurement issues researchers confront in estimating the price effects of mergers. We also describe how evidence from merger retrospectives can be used to evaluate the economic models used to predict the competitive effects of mergers.
Keywords: mergers; antitrust enforcement; consumer welfare; price effects
JEL Codes: K21; L1; L4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| confounding factors (demand and cost shocks) (E39) | misleading conclusions about price effects of mergers (D43) |
| observable characteristics of mergers associated with price increases (L11) | certain types of mergers are more likely to be anticompetitive (L41) |
| consummated mergers in concentrated markets (L12) | higher consumer prices (D19) |
| enhanced market power from mergers (D43) | higher consumer prices (D19) |