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Predicting Price Effects from Retail Mergers

15 Pages Posted: 4 Apr 2012 Last revised: 24 Aug 2013

Michael J. Doane

Competition Economics LLC

Luke Froeb

Vanderbilt University - Strategy and Business Economics

Gregory J. Werden

U.S. Department of Justice - Antitrust Division

David M. Zimmer

Western Kentucky University - Department of Economics

Date Written: January 14, 2013

Abstract

We propose a simple method for predicting price effects from mergers between branded retail chains competing in many local markets. When past mergers created markets with the same number of brands but different numbers of brand owners, price data at a single point in time exhibit between-market variation much like the variation over time from mergers. We construct an estimator isolating this between-market variation and use it to predict price effects from mergers in the car rental industry.

Keywords: horizontal mergers, retailing, rental car industry

JEL Classification: L11, L40, L91

Suggested Citation

Doane, Michael J. and Froeb, Luke and Werden, Gregory J. and Zimmer, David M., Predicting Price Effects from Retail Mergers (January 14, 2013). Vanderbilt Owen Graduate School of Management Research Paper No. 2034464. Available at SSRN: https://ssrn.com/abstract=2034464 or http://dx.doi.org/10.2139/ssrn.2034464

Michael J. Doane

Competition Economics LLC ( email )

2000 Powell Street
Suite 510
Emeryville, CA 94608
United States
510-655-7503 (Phone)

Luke M. Froeb

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

Gregory J. Werden (Contact Author)

U.S. Department of Justice - Antitrust Division ( email )

450 Fifth Street, NW
9th Floor
Washington, DC 20530
United States
202-307-6366 (Phone)

David M. Zimmer

Western Kentucky University - Department of Economics ( email )

Grise Hall, Room 426
1906 College Heights Blve.
Bowling Green, KY 42101
United States

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