Application of Empirical Methods in Merger Analysis

48 Pages Posted: 7 Mar 2010

See all articles by Gregory K. Leonard

Gregory K. Leonard

Charles River Associates

Christian Michael Dippon

NERA Economic Consulting

Lawrence Wu

National Economic Research Associates (NERA)

Date Written: June 27, 2005

Abstract

The variety of empirical methods that can be applied to assess the competitive implications of proposed mergers has increased over time. This is due, in part, to the greater availability of data of all types, ranging from specific transaction level data collected at the retail store to aggregate product sales and profitability data. The range of alternative methodologies also reflects advances in theoretical economics, as well as econometric techniques, which have enabled economists to use and analyze data to answer difficult questions more easily and readily. The increasing use of modern economic tools is part of a general trend in which merger reviews have become more sophisticated and complex.

In this report, published as part of a larger report by the Competition Policy Research Center, Fair Trade Commission of Japan (CPRC/JFTC), we survey a broad range of techniques that have been used to assess market definition and market power issues in the context of a merger review. The report also addresses techniques that attempt to estimate the competitive impact of a proposed merger or acquisition. Case studies are used to demonstrate how the techniques have been used in practice.

Keywords: Econometrics, Merger Analysis

JEL Classification: C1

Suggested Citation

Leonard, Gregory K. and Dippon, Christian Michael and Wu, Lawrence Y., Application of Empirical Methods in Merger Analysis (June 27, 2005). Available at SSRN: https://ssrn.com/abstract=1565107 or http://dx.doi.org/10.2139/ssrn.1565107

Gregory K. Leonard (Contact Author)

Charles River Associates ( email )

601 12th Street
Ste. 1500
Oakland, CA 94607
United States
510-595-2706 (Phone)

Christian Michael Dippon

NERA Economic Consulting ( email )

1255 23rd Street, NW, Suite 600
Washington, DC 20037
United States

HOME PAGE: http://www.nera.com/

Lawrence Y. Wu

National Economic Research Associates (NERA) ( email )

Four Embarcadero Center
Suite 400
San Francisco, CA 94111
United States
415-291-1007 (Phone)

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