The Price Effects of a Large Merger of Manufacturers

44 Pages Posted: 3 Jun 2011 Last revised: 22 Oct 2011

See all articles by Matthew Weinberg

Matthew Weinberg

The Ohio State University, Department of Economics

Orley Ashenfelter

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Daniel S. Hosken

Government of the United States of America - Federal Trade Commission

Date Written: April 21, 2011

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

Suggested Citation

Weinberg, Matthew and Ashenfelter, Orley C. and Hosken, Daniel S., The Price Effects of a Large Merger of Manufacturers (April 21, 2011). Available at SSRN: https://ssrn.com/abstract=1857066 or http://dx.doi.org/10.2139/ssrn.1857066

Matthew Weinberg (Contact Author)

The Ohio State University, Department of Economics ( email )

410 Arps Hall, 1945 N. High St.
3220 Market Street
Columbus, OH 43210
United States

HOME PAGE: http://https://sites.google.com/site/matthewcweinberg/

Orley C. Ashenfelter

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4040 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Daniel S. Hosken

Government of the United States of America - Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

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