Static and Dynamic Merger Effects: A Market Share Based Empirical Analysis
33 Pages Posted: 4 Nov 2009 Last revised: 5 Aug 2011
Date Written: November 3, 2009
Merger-specific efficiencies continue to play a relatively small role in merger enforcement and merger retrospectives. Motivated by the paucity of empirical analyses of merger-specific efficiencies, we examine a merger's market share effects. Standard merger theory predicts that if merger-specific efficiencies are present, the merged firm should regain market share in the long-run. We estimate short and long-run merger effects on market shares from the divestiture of Texaco's Canadian assets. We use a difference-in-difference specification that compares changes for the merging firm with changes for other vertically integrated firms in the same market. Our approach is a useful complement to across market comparisons, which are often hindered by the difficulty of finding control markets that experience the same supply and demand shocks as the treatment markets.
Keywords: merger, concentration, market share, gasoline
JEL Classification: L41, L71, L2, L1
Suggested Citation: Suggested Citation