Horizontal Merger Analysis in Retail Markets
58 Pages Posted: 21 Jan 2015
Date Written: January 19, 2015
Abstract
In this essay, we describe antitrust analysis of horizontal mergers in U.S. retail markets. We begin by providing a brief overview of the economic and legal framework governing horizontal merger policy, and highlight key issues in analyzing retail mergers. Next, we discuss the changing legal treatment of retailing mergers by providing a description of four major merger challenges brought by U.S. antitrust authorities over the last 50 years. We then provide a detailed discussion of the economic tools used to analyze retailing mergers. We start by presenting a frequently used model of retail competition to illustrate how retail mergers can create or enhance market power. We then describe a variety of structural and reduced form empirical techniques that can be used to quantify competition between merging retailers and, in some cases, to forecast merger price effects.
Keywords: retailing, horizontal mergers, antitrust
JEL Classification: K21, L11, L40, L81
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