Working Paper: NBER ID: w31123
Authors: Vivek Bhattacharya; Gastón Illanes; David Stillerman
Abstract: We document the effects of a comprehensive set of mergers of US consumer packaged goods manufacturers on prices, quantities, and product assortment. Across a range of specifications, we find a small average price effect of mergers (-0.6% to 1.6%) but substantial heterogeneity in effects, with a standard deviation between 5.3–6.7 pp. Through a model of enforcement, we find that agencies challenge mergers they expect would increase prices more than about 4%–8%. Modest increases in stringency would reduce prices and the prevalence of completed price-increasing mergers, with minimal impacts on blocked price-decreasing mergers, at a significantly greater agency burden.
Keywords: mergers; antitrust enforcement; consumer packaged goods; price effects; quantities sold
JEL Codes: D43; K21; L13; L41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Herfindahl-Hirschman Index (HHI) (L19) | prices (P22) |
| antitrust agencies blocking mergers (L41) | prices raised by more than 89% (P22) |
| lowering the threshold for antitrust agencies (K21) | number of challenged cases (K16) |
| mergers in more concentrated markets (L19) | larger price effects (D49) |
| completed mergers in the US consumer packaged goods sector (L66) | prices (P22) |
| completed mergers in the US consumer packaged goods sector (L66) | quantities sold (C69) |