Demand Side Merger Efficiencies

37 Pages Posted: 1 Jan 2010

See all articles by David Reitman

David Reitman

Charles River Associates, Inc.

Dipan Ghosh

Charles River Associates (CRA)

Date Written: December 30, 2009


Mergers can generate demand side efficiencies that benefit customers in a number of ways, including procurement savings, transaction efficiencies, and quality improvements. We show that per-unit demand side efficiencies and marginal cost efficiencies of the same magnitude have an equivalent impact on the post-merger market in terms of output and welfare. Consequently, there is no reason to distinguish between marginal cost savings and demand side per-unit efficiencies when evaluating the impact of a merger. We demonstrate how various techniques for evaluating the impact of mergers – compensating marginal cost reductions, upward pricing pressure, and merger simulation – can be readily adapted to incorporate demand side as well as supply side efficiencies.

Keywords: horizontal mergers, efficiencies

JEL Classification: K21, L41

Suggested Citation

Reitman, David and Ghosh, Dipan, Demand Side Merger Efficiencies (December 30, 2009). Available at SSRN: or

David Reitman (Contact Author)

Charles River Associates, Inc. ( email )

1201 F Street, N.W., Suite 700
Washington, DC 20004-1204
United States

Dipan Ghosh

Charles River Associates (CRA) ( email )

1201 F. St. NW
Ste. 700
Washington, DC 20004

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