Footnotes (41)



Demand Side Merger Efficiencies

David Reitman

Charles River Associates, Inc.

Dipan Ghosh

Charles River Associates (CRA)

December 30, 2009

Mergers can generate demand side efficiencies that benefit customers in a number of ways, including procurement savings, transaction efficiencies, and quality improvements. We show that per-unit demand side efficiencies and marginal cost efficiencies of the same magnitude have an equivalent impact on the post-merger market in terms of output and welfare. Consequently, there is no reason to distinguish between marginal cost savings and demand side per-unit efficiencies when evaluating the impact of a merger. We demonstrate how various techniques for evaluating the impact of mergers – compensating marginal cost reductions, upward pricing pressure, and merger simulation – can be readily adapted to incorporate demand side as well as supply side efficiencies.

Number of Pages in PDF File: 37

Keywords: horizontal mergers, efficiencies

JEL Classification: K21, L41

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Date posted: January 1, 2010  

Suggested Citation

Reitman, David and Ghosh, Dipan, Demand Side Merger Efficiencies (December 30, 2009). Available at SSRN: http://ssrn.com/abstract=1529791 or http://dx.doi.org/10.2139/ssrn.1529791

Contact Information

David Reitman (Contact Author)
Charles River Associates, Inc. ( email )
1201 F Street, N.W., Suite 700
Washington, DC 20004-1204
United States
Dipan Ghosh
Charles River Associates (CRA) ( email )
1201 F. St. NW
Ste. 700
Washington, DC 20004
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