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Static and Dynamic Merger Effects: A Market Share Based Empirical Analysis

33 Pages Posted: 4 Nov 2009 Last revised: 5 Aug 2011

Mikko Packalen

University of Waterloo - Department of Economics

Anindya Sen

University of Waterloo - Department of Economics

Date Written: November 3, 2009

Abstract

Merger-specific efficiencies continue to play a relatively small role in merger enforcement and merger retrospectives. Motivated by the paucity of empirical analyses of merger-specific efficiencies, we examine a merger's market share effects. Standard merger theory predicts that if merger-specific efficiencies are present, the merged firm should regain market share in the long-run. We estimate short and long-run merger effects on market shares from the divestiture of Texaco's Canadian assets. We use a difference-in-difference specification that compares changes for the merging firm with changes for other vertically integrated firms in the same market. Our approach is a useful complement to across market comparisons, which are often hindered by the difficulty of finding control markets that experience the same supply and demand shocks as the treatment markets.

Keywords: merger, concentration, market share, gasoline

JEL Classification: L41, L71, L2, L1

Suggested Citation

Packalen, Mikko and Sen, Anindya, Static and Dynamic Merger Effects: A Market Share Based Empirical Analysis (November 3, 2009). Available at SSRN: https://ssrn.com/abstract=1499723 or http://dx.doi.org/10.2139/ssrn.1499723

Mikko Packalen (Contact Author)

University of Waterloo - Department of Economics ( email )

Waterloo, Ontario N2L 3G1
Canada

Anindya Sen

University of Waterloo - Department of Economics ( email )

200 University Avenue W.
Waterloo, Ontario N2L 3G1
Canada
519.885.1211, ext. 2123 (Phone)
519.725.0530 (Fax)

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