Predicting Price Effects from Retail Mergers
15 Pages Posted: 4 Apr 2012 Last revised: 24 Aug 2013
Date Written: January 14, 2013
We propose a simple method for predicting price effects from mergers between branded retail chains competing in many local markets. When past mergers created markets with the same number of brands but different numbers of brand owners, price data at a single point in time exhibit between-market variation much like the variation over time from mergers. We construct an estimator isolating this between-market variation and use it to predict price effects from mergers in the car rental industry.
Keywords: horizontal mergers, retailing, rental car industry
JEL Classification: L11, L40, L91
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