Ex-Post Merger Review and Divestitures
Stockholm School of Economics - Department of Economics
University of Navarra, IESE Business School
December 1, 2012
IESE Business School Working Paper No. WP-1056-E
Divestitures have received little attention in ex-post evaluations of mergers. In partial remedy we simulate the effects of the Carlsberg-Pripps merger in the Swedish beer market and compare the predicted outcomes with those observed ex-post. There are no important price increases following the merger and prices of divested beers fell. Our merger simulations, that are based on a random coefficients logit model, capture these pricing patterns and suggest that the divestitures were important in limiting price increases. Knowledge of the retailer's markup rules allows us to discard retailer behavior as an explanation for the pricing patterns.
Number of Pages in PDF File: 42
Keywords: merger simulation, ex-post merger review, divestitures, demand for beer
JEL Classification: K21, L11, L41, L66
Date posted: November 14, 2013
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