Abstract

http://ssrn.com/abstract=939056
 
 

Citations (3)



 
 

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The Effects of Merger Efficiencies on Consumers of Differentiated Products


Gregory J. Werden


U.S. Department of Justice - Antitrust Division

Luke Froeb


Vanderbilt University - Strategy and Business Economics

Steven Tschantz


Vanderbilt University - Department of Mathematics


European Competition Journal, Vol. 1, No. 2, October 2005

Abstract:     
In differentiated products industries, the extent of the pass through of merger-specific marginal-cost reductions is determined largely by the curvature of demand and idiosyncratic properties of particular functional forms for demand. Thus, addressing pass through as a separate and distinct component of merger analysis is likely to be unproductive. An alternative approach is to determine whether merger-specific marginal-cost reductions are sufficient to offset entirely the price-increasing effects of a merger. In addition, pass-through rates are closely linked to the price-increasing effects of mergers; demand properties that lead to large price increases from mergers absent cost reductions also lead to high pass-through rates. This implies the existence of simple and practical consistency checks on price increase and pass-through predictions.

Number of Pages in PDF File: 25

Keywords: mergers, efficiencies, pass through

JEL Classification: L41, L13, D43

Accepted Paper Series


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Date posted: October 22, 2006  

Suggested Citation

Werden, Gregory J. and Froeb, Luke and Tschantz, Steven, The Effects of Merger Efficiencies on Consumers of Differentiated Products. Available at SSRN: http://ssrn.com/abstract=939056

Contact Information

Gregory J. Werden (Contact Author)
U.S. Department of Justice - Antitrust Division ( email )
450 Fifth Street, NW
9th Floor
Washington, DC 20530
United States
202-307-6366 (Phone)
Luke M. Froeb
Vanderbilt University - Strategy and Business Economics ( email )
Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Steven T. Tschantz
Vanderbilt University - Department of Mathematics ( email )
Nashville, TN 37240
United States
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