Working Paper: NBER ID: w19353
Authors: Orley C. Ashenfelter; Daniel Hosken; Matthew C. Weinberg
Abstract: Merger efficiencies provide the primary justification for why mergers of competitors may benefit consumers. Surprisingly, there is little evidence that efficiencies can offset incentives to raise prices following mergers. We estimate the effects of increased concentration and efficiencies on pricing by using panel scanner data and geographic variation in how the merger of Miller and Coors breweries was expected to increase concentration and reduce costs. All else equal, the average predicted increase in concentration lead to price increases of two percent, but at the mean this was offset by a nearly equal and opposite efficiency effect.
Keywords: mergers; pricing; beer industry; efficiencies; consolidation
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 |
|---|---|
| Miller-Coors merger (L66) | predicted increase in concentration (C29) |
| Miller-Coors merger (L66) | efficiencies gained from the merger (G34) |
| predicted increase in concentration (C29) | price increases (E30) |
| efficiencies gained from the merger (G34) | price decreases (D41) |
| Miller-Coors merger (L66) | net effect on pricing (D49) |