Ex-Post Merger Evaluation in the UK Retail Market for Books

Quaderni - Working Paper DSE N° 889

DIW Berlin Discussion Paper No. 1310

67 Pages Posted: 22 Jun 2013 Last revised: 18 Sep 2013

Luca Aguzzoni

European Union - Directorate General for Competition

Elena Argentesi

University of Bologna - Department of Economics

Lorenzo Ciari Sr.

European University Institute

Tomaso Duso

German Institute for Economic Research (DIW Berlin); Duesseldorf Institute for Competition Economics (DICE)

Massimo Tognoni

UK Competition Commission

Date Written: June 14, 2013

Abstract

This paper empirically evaluates the price effects of the merger of two major book retail chains in the UK: Waterstone’s and Ottakar’s. We employ differences-in-differences techniques and use a rich dataset containing monthly scanner data information on a sample of 200 books sold in 60 stores in 50 different local markets for a period of four years around the merger. Since retail mergers may have either local or national effects (or both) according to the level at which retail chains set prices, we undertake an ex-post assessment of the impact of the merger at both levels. At the local level, we compare the changes in the average price charged before and after the merger in the shops located in overlap areas – i.e. areas where both chains were present before the merger – and in non-overlap areas – i.e. areas where only one chain was present before the merger. At the national level, we employ two distinct control groups to evaluate the merger, namely the competitors and the top-selling titles. We find that the merger did not result in an increase in prices either at the local or at the national level. We also perform heterogeneous treatment effects estimations in order to assess whether the effect of the merger differs along various dimensions of heterogeneity that are present in our data.

Keywords: Mergers, Ex-post Evaluation, Book market, Retail sector

JEL Classification: K21, L24, L44, D22, O32

Suggested Citation

Aguzzoni, Luca and Argentesi, Elena and Ciari, Lorenzo and Duso, Tomaso and Tognoni, Massimo, Ex-Post Merger Evaluation in the UK Retail Market for Books (June 14, 2013). Quaderni - Working Paper DSE N° 889; DIW Berlin Discussion Paper No. 1310. Available at SSRN: https://ssrn.com/abstract=2283053 or http://dx.doi.org/10.2139/ssrn.2283053

Luca Aguzzoni (Contact Author)

European Union - Directorate General for Competition ( email )

Place Madou, Madouplein 1
Saint-Josse-ten-Noode/Sint-Joost-ten-Noode
Brussels, B-1049
Belgium

Elena Argentesi

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, BO 40141
Italy
+39 051 209 8661 (Phone)
+39 051 209 8040 (Fax)

HOME PAGE: http://www2.dse.unibo.it/argentes/

Lorenzo Ciari Sr.

European University Institute ( email )

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

Tomaso Duso

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany
+49 211- 81 10235 (Phone)
+49 211- 81 15499 (Fax)

HOME PAGE: http://sites.google.com/site/tomasoduso/home

Massimo Tognoni

UK Competition Commission ( email )

Victoria House
Southampton Row
London, WC1B 4AD
United Kingdom

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