The Price Effects of a Large Merger of Manufacturers

Abstract

Many experts have speculated that U.S. antitrust policy towards horizontal mergers was too lenient over the last decade. We estimate the price effects resulting from the merger of Whirlpool and Maytag to provide new evidence on this debate. The merger substantially increased concentration in four appliance markets: clothes washers and dryers, refrigerators and dishwashers. We compare the change in prices for appliance markets most affected by the merger to markets where concentration changed much less or not at all. We find evidence of modest price increases for dishwashers and relatively large price increases for clothes dryers while refrigerator and clothes washer prices appear largely unchanged as a result of the merger. The combined Whirlpool/Maytag’s market share fell across all four affected categories after the merger. We also find that Whirlpool/Maytag reduced the number of distinct appliance products offered post-acquisition.

Keywords: Antitrust, Industrial Organization, Law and Economics